The industrial performance for 2011-12 seemed to be ending on a sad note, as the crucial eight sectors grew a dismal two per cent in March, against 6.9 per cent in February, owing to contraction in crude oil and natural gas and slowing growth in electricity. The eight sectors, which have a weight of 38 per cent in the index of industrial production (IIP), grew 6.5 per cent in March 2011.
So, unless the remaining of 62 per cent of IIP fares really well in March 2012, industrial growth would not see much rise. It was only in October 2011 and January 2012 that the core sector grew less than two per cent in a month this financial year—0.4 per cent and 0.7 per cent, respectively.
For the entire year, core sector growth stood at 4.3 per cent, against 6.6 per cent in the previous year, as the coal sector remained under pressure in the first half of the year and started showing a recovery only after November. Natural gas output, on the other hand, showed negative growth the entire year.
2011-12 may well be called the year of revisions, as data of at least 10 months was revised along with the release of March data today— primarily revisions in steel output data. This would mean a further revision in the IIP numbers, after the IIP data error for January, which led to a downward revision in the IIP numbers from 6.8 per cent to 1.1 per cent.
Coal output recorded a slowdown in growth at 6.8 per cent in March from a robust 17.8 per cent in February. While for the entire year, it recorded growth of 1.2 per cent, against -0.2 per cent in 2010-11.
Growth of natural gas output remained negative for 2011-12. It stood at (-)10.1 per cent in March, further down from (-) 7.6 per cent in February. For the entire financial year, output in natural gas contracted 8.9 per cent, against 10 per cent last year. Refinery products just 1.6 per cent in March, against 6.2 per cent in February.
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“The year is ending with low numbers, which will impact the manufacturing growth as well, resulting in a downward revision of the GDP from 6.9 per cent, as calculated by advanced estimates”, said Anis Chakravarty, senior director, Deloitte Touche Tohmatsu.
The impact on GDP would depend on the net effect of the slowdown in manufacturing and higher agricultural production, analysts said.
Manufacturing grew 3.7 per cent till February, against 8.7 per cent in the corresponding period of 2010-11. Overall, industrial production rose 3.5 per cent against 8.1 per cent.
Electricity showed a worrisome trend, falling to 2.1 per cent in March from 8.6 per cent in February and 3.2 per cent in January. “It is strange to see such volatility in electricity numbers, because the electricity consumption does not vary so much”, said Chakravarty.
In fact, it was electricity which continued to register growth, despite dismal performances in other segments of industry. In the first eleven months of 2011-12, electricity generation rose 8.7 per cent, against 5.3 per cent. Now, with growth in electricity generation also slowing, industrial production is sure to be hit.