Industry logs 8.8% growth in H1

Industrial production decreased to 7.3 per cent in September as against 9.8 per cent during the corresponding period last year on account of lower activity in the mining and electricity sectors.

A better performance by the manufacturing sector, however, helped the IIP grow 8.8 per cent during April-October this year as against 8.3 per cent during the first half last year.

According to data released by the ministry of statistics and programme implementation, production in the electricity sector during September went down 0.7 per cent compared with growth of 7.7 per cent in September 2004.

Mining activity dropped 1.1 per cent, compared with an increase of 5.1 per cent during the corresponding period last year. Growth in the manufacturing sector was also lower at 8.9 per cent compared with 10.5 per cent in 2004.

Crisil senior economist D K Joshi said the slowdown did not reflect a systemic slowdown as the manufacturing sector had clocked a healthy 8.9 per cent over a high base last year.

"The slowdown in the mining and the electricity sector is not unusual as the two sectors usually show high variability in production levels," he said.

"Manufacturing is the index to watch out for. Our electricity numbers don't mean much as most of it is captive generation. The prospects for mining are bright and the cycle here is driven by the Chinese growth. If manufacturing continues to grow at 8 per cent, I would be happy, and I would be ecstatic if it is above 10 per cent," said Suman Bery, Director General of the National Council of Applied Economic Research.

Cumulative growth during April-September was lower in mining and electricity but higher in case of manufacturing, which registered growth of 9.9 per cent compared with 8.8 per cent during the first six months in 2004-05.

According to the use-based classification, the growth was 2.6 per cent in basic goods, 17.6 per cent in capital goods and 1.9 per cent in intermediate goods. The consumer durables and consumer non-durables recorded growth of 12.4 per cent and 13.4 per cent, respectively, with an overall growth of 13.1 per cent in consumer goods.

As many as 14 of the 17 sectors have shown two-digit growth during September 2005 compared with the corresponding month of the previous year. While "other manufacturing industries" have shown the highest growth of 31.1 per cent, transport equipment and parts have shown growth of 16.1 per cent, and beverages, tobacco and related products have grown 15.3 per cent.

Growth in wood and wood products, furniture and fixtures declined 11.5 per cent while growth in metal products dipped 7.2 per cent. Growth in food products declined 0.6 per cent during September this year.