A leading economic think-tank has said that industrial activity in the country would not slow down despite the monthly Index of Industrial Production (IIP) for manufacturing slipping to 5.6 per cent.
"We believe that industrial growth is not appropriately captured by the IIP numbers and there is no real slowdown in industrial activity," the Centre for Monitoring Indian Economy (CMIE) said in its latest report.
IIP has depicted a deceleration in the growth of the manufacturing sector to 5.6 per cent for the June 2008 quarter. Financial results of 2,144 listed manufacturing companies have shown a 33.9 per cent rise in aggregate net sales in the June 2008 quarter, the report said.
"After deflating the sales growth by the WPI inflation numbers, we get a real growth of 22.6 per cent in the sales of the manufacturing sector which is much higher than the 5.6 per cent growth in production depicted by the IIP in the June 2008 quarter," CMIE said.
Considering the large sample of companies for which sales data is available and the wide difference in the growth numbers of their real sales and the corresponding IIP, "we conclude that the current industrial growth depicted by the IIP is a gross under-estimate," it said.
A sector-by-sector comparison also shows that there is a discrepancy in the real sales growth and IIP growth figures of food products, textiles, basic metals and metal products and machinery," the report said.
