Industry growth dips to 8% on mining

Industry grew by 8 per cent during 2005-06, compared with 8.4 per cent a year ago, due to a fall in the growth of the mining sector and a slight dip in manufacturing. The sector grew 9 per cent for 2005-06 compared with 9.2 per cent last year.

The Index of industrial production (IIP) for the month of March also slowed down to 7.7 per cent compared with 9.8 per cent for the same period last year.

The manufacturing sector witnessed a fall in growth rate for the month of March, to 8.9 per cent compared with 10.9 per cent a year ago.

"Though there are month-to-month variations in the IIP figure, the overall scenario is buoyant as the annual figures are positive. The exception is the mining sector, which is underperforming," said DK Joshi, senior economist, CRISIL.

Core sectors like electricity, mining and crude petroleum continued to show poor growth.

Mining activities remained sluggish and grew only 0.7 per cent in 2005-06 compared with 4.4 per cent a year ago. The sector grew 0.5 per cent in March 2006, compared with 6.6 per cent for the same period last year.

Electricity generation, which grew 5.1 per cent for the fiscal 2005-06 compared with 5.4 per cent last year, witnessed the same growth rate of 3.2 per cent in March for the years 2005 and 2006.

The investment scenario remained positive with the capital goods segment growing by 15.5 per cent during 2005-06, compared with 13.9 per cent during the last fiscal.

"The investment climate remains healthy with both the capital goods segment and machinery investment growing at a healthy rate," added Joshi.

However, for the month of March 2006, demand for capital goods registered a substantial fall to 10 per cent compared with 23 per cent in March 2005.

While consumer durables grew slightly, to 14.6 per cent in 2005-06, compared with 14.4 per cent growth last March, the group grew significantly to 19.4 per cent against 10.8 per cent last year.