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Pulled down by mining and consumer durables output, industrial growth slowed to 1.7 per cent in December compared to 3.9 per cent in November, prompting industry to ask for growth-boosting measures in the coming Union Budget.
Growth remained subdued in other segments of industrial production. The rise in the Index of Industrial Production (IIP) had stood at 0.1 per cent in December 2013 and even a low base could not push up the number for December 2014.
Overall IIP grew by 2.1 per cent in the first nine months of this financial year against 0.1 per cent in the same period of 2013-2014.
In October, IIP was down 4.2 per cent, which showed the November recovery to be an aberration.
The main reason why the IIP growth rate dropped in December from the previous month was due to contraction in mining output by 3.2 per cent, compared to a growth rate of 2.6 per cent in the same month in 2013, and continued fall of consumer durables within manufacturing, data released by the ministry of statistics and programme implementation showed on Thursday.
Consumer durables’ output in December contracted nine per cent, compared to a fall of 16.4 per cent in December 2013. This was a seventh month in a row of a fall in this segment. Consumer non-durables, however, grew 5.7 per cent in December as against 2.8 per cent in December 2013. Thereby, overall growth in consumer goods in December was 0.7 per cent.
CARE Ratings chief economist Madan Sabnavis said, "The poor performance of consumer durables and consumer non-durables is an indication of people not spending due to shrinking purchasing power."
Growth in electricity generation slackened to 4.8 per cent in December 2014, compared to 7.5 per cent in December 2013.
On the other hand, manufacturing, which has a weightage of 75.52 per cent in the IIP, registered a growth rate of 2.1 per cent in December. It had contracted 1.1 per cent in December 2013. Again, the low base could not lift manufacturing significantly
“If one sees the entire nine-month period, rather than month on month, there has been no growth at all in any of the key sectors, except in electricity. Mining and manufacturing are reeling under some fundamental problems which need to be addressed,” said Sabnavis.
During April-December, the first nine months of 2014-15, the manufacturing sector grew 1.2 per cent, compared to a contraction of 0.4 per cent in the corresponding financial year of 2013-2014.
“There is a need to stimulate investments in the sector to sustain any growth. We are hopeful that the coming Budget would factor-in the slow growth in manufacturing for the past many months and the need to provide major incentives to revive investments in the sector,” said A Didar Singh, secretary general of business chamber Ficci.
Saying the Budget was a great opportunity to provide a fillip to investment, CII director general Chandrajit Banerjee pressed for incentivising the 'Make in India" initiative by reworking minimum alternate tax, restoring incentives for special economic zones and providing a stable, transparent and predictable tax and regulatory regime for businesses.
Along with consumer goods, other industries also showed muted growth numbers for December. Basic goods rose 2.4 per cent, capital goods 4.1 per cent and intermediate items by 0.1 per cent.
Production of radio, television sets and communication equipments contracted a massive 70 per cent in December. The highest growth in production was witnessed by furniture, at 45.4 per cent.
Thirteen of 22 industry groups showed growth in December, against 16 in November.
A LOOK AT THE NEW CPI
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The base year revised to 2012 from 2010 and weights to consumption expenditure survey of 2011-12 (July-June) from 2004-05
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As such, gap between the base year and weights narrowed to six months from six years in earlier series
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Number items increased to 448 from 437 to 448 in rural areas and from 450 to 460 in urban parts
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As many as 11 items added, without dropping any, in rural sector
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Seven items dropped in urban area and 17 added
- Number of groups increased to six from five. Pan, tobacco and intoxicants carved out as a separate category from food and beverages
