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Industrial growth jumped to a three-month high of five per cent in February from 2.8 per cent in January, with strong performances in almost every segment, barring consumer durables and intermediate goods. February was only the third month in 2014-15 to have recorded industrial growth of five per cent or more.
Industrial growth was high despite the core sector, which accounts for 38 per cent of Index of Industrial Production (IIP), declining to a 17-month low of 1.4 per cent in February.
For November 2014, the growth was revised to 5.2 per cent from the previous reading of 3.9 per cent. Industrial output grew 5.6 per cent in May 2014. Data released on Friday showed the 1.9 per cent decline in February 2014 magnified the IIP for February this year. Data for the next few months will show whether there is an industrial turnaround. Cumulative industrial growth for April-February 2014-15 was 2.8 per cent, against a contraction of 0.1 per cent a year ago.
Industrial production moved in sync with data for gross domestic product (GDP). Industrial growth was 2.5 per cent in January, 3.2 per cent in December and (-)2.6 per cent in October. For 2014-15, GDP growth is officially pegged at 7.4 per cent, against 6.9 per cent in 2013-14.
February’s industrial growth was broad-based: mining grew 2.5 per cent, against a contraction of two per cent in January; manufacturing 5.2 per cent, against 3.4 per cent (growth in manufacturing output was at a nine-month high); and electricity 5.9 per cent, against 3.3 per cent. Capital goods grew 8.8 per cent in February, lower than 12.54 per cent in January. Though this segment is volatile, if the trend is sustained through the next few months, it will boost industrial production.
Consumer durables contracted 3.4 per cent in February, against 5.5 per cent in January, while consumer non-durables output rose 10.7 per cent, up from 0.27 per cent.
The intermediate goods segment expanded 1.1 per cent, against a contraction of 0.06 per cent in January. As many as 15 of the 22 industry segments posted growth in February, against 14 in January.
Industrial growth was high despite the core sector, which accounts for 38 per cent of Index of Industrial Production (IIP), declining to a 17-month low of 1.4 per cent in February.
For November 2014, the growth was revised to 5.2 per cent from the previous reading of 3.9 per cent. Industrial output grew 5.6 per cent in May 2014. Data released on Friday showed the 1.9 per cent decline in February 2014 magnified the IIP for February this year. Data for the next few months will show whether there is an industrial turnaround. Cumulative industrial growth for April-February 2014-15 was 2.8 per cent, against a contraction of 0.1 per cent a year ago.
Industrial production moved in sync with data for gross domestic product (GDP). Industrial growth was 2.5 per cent in January, 3.2 per cent in December and (-)2.6 per cent in October. For 2014-15, GDP growth is officially pegged at 7.4 per cent, against 6.9 per cent in 2013-14.
February’s industrial growth was broad-based: mining grew 2.5 per cent, against a contraction of two per cent in January; manufacturing 5.2 per cent, against 3.4 per cent (growth in manufacturing output was at a nine-month high); and electricity 5.9 per cent, against 3.3 per cent. Capital goods grew 8.8 per cent in February, lower than 12.54 per cent in January. Though this segment is volatile, if the trend is sustained through the next few months, it will boost industrial production.
Consumer durables contracted 3.4 per cent in February, against 5.5 per cent in January, while consumer non-durables output rose 10.7 per cent, up from 0.27 per cent.
The intermediate goods segment expanded 1.1 per cent, against a contraction of 0.06 per cent in January. As many as 15 of the 22 industry segments posted growth in February, against 14 in January.
Icra senior economist Aditi Nayar said the growth was largely coming from the consumer non-durables sector and within that, from four segments --- apparels (52.5 per cent growth in February), leather garments (151.8 per cent), polythene bags (131.6 per cent)and vitamins (60.5 per cent). Growth in the first two segments wasn’t in line with merchandise exports. Leather and leather exports declined 7.5 per cent in February, man-made yarn and fabrics 7.9 per cent and cotton yarn and fabrics 1.2 per cent.
“Even if polythene bags and vitamins rise phenomenally, it does not signify much in terms of an industrial turnaround,” Nayar said.
She said electricity generation wasn’t very significant in the long-term series, while mining was looking up primarily due to a good performance by Coal India Ltd (CIL). The company’s production rose 6.8 per cent in February. In a note, CARE Ratings said, “The mining and manufacturing sectors appear to have picked up pace. This is reflective of policy actions in terms of faster clearances of projects. The pick-up in manufacturing activity is also suggestive of the rising demand.”
However, it cautioned as credit growth remained lacklustre, it was premature to conclude IIP would record good growth ahead as well. “The impact of rate cuts, ‘Make in India’ and coal auctions will be seen only in the later part of FY16,” it added.
Anis Chakravarty, senior director, Deloitte in India, said, “Going forward, the effects of the push to infra projects by the government and the Make in India campaign will be visible. These are likely to give an impetus to capital goods production and bode well for industry and trade.”
