The industry ministry has scaled down its industrial growth projections for the current fiscal to 4.5-5 per cent from the earlier 6 per cent, following the release of CSO data for the month of December 1997.
Growth in December, according to CSO figures released on Tuesday, was at 2.1 per cent as against 6 per cent in November. The CSO figure was in consonance with data released earlier by the CII.
The industry ministry had earlier hoped that a low base in January-March 1997, would hype up growth during the last quarter of the current fiscal. Industrial growth in the last quarter of 1996-97 stood at 2.3 per cent in January, 3.6 per cent in February and 2.1 per cent in March.
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For the current fiscal, the sharp dip in December has almost certainly ruled out the possibility of the internal targets for industrial growth being met, said ministry sources. Industrial growth during the April-December period, according to CSO, is 4.7 per cent, implying that growth in the last quarter will have to be in the 7 per cent plus range to meet the 6 per cent growth targets for the current fiscal.
The government had been earlier optimistic because of the buoyancy in cement production. However, the sales figures of cement manufacturers do not indicate a pick-up, which means that the growth in cement industry is merely a reflection of inventory build-up with cement manufacturers.
Another positive sign earlier was the initial estimates of growth in electricity production in January, which has been in the range of 7 per cent.
However, indications are that much of the power has been drawn by agriculture, while the rest has been drawn by industry. This drawal is not sufficient to reverse the trend seen during the first three quarters of the year, sources said.
The industry ministry is hedging its bets by releasing only a range and not a firm projection figure.
This is so since revisions in the previous months growth figures cannot be ruled out. In April 997, the CSO had revised growth in the manufacturing sector upwards by 16 per cent, thereby revising the Index steeply upwards.
This upward revision was thereafter questioned as it had been done during the month of April, when the manufacturing sector was hit by the truckers strike.
However, now that India is on the International Data Standards, such steep revisions may not be easily possible.