Dec industrial output growth slowest in 20 months

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SME Times News Bureau | 11 Feb, 2011
Industrial output in December 2010 grew at its slowest pace in almost two years, rising by a modest 1.6 percent, compared to the same month of the previous year, according to official data released Friday.

The index of industrial production, the barometer of the output of various sectors like manufacturing, stood at 8.6 percent for the April-December period of the current fiscal, according to data released by the Planning Commission here.

Industrial output grew by 18.6 percent in December 2009, although it was in comparison to a lower base.

Industrial output in November, earlier registered at 2.7 percent, was revised upwards to 3.62 percent, the data showed.

Manufacturing output, which constitutes a majority of the IIP rose by 1 percent in December, while mining and electricity sectors grew by 3.8 percent and 6 percent, respectively.

During the month, capital goods and consumer non-durable goods showed the most negative growth. Important items registering high negative growth included computer system and peripherals (-52.2 percent), and agricultural implements (-49.6 percent).

Twelve out of the seventeen industry groups have shown positive growth during the month of December.

Commenting on the latest data, Finance Minister Pranab Mukherjeee said the data was "disappointing but on expected lines". He, however, said that monthly numbers did not reflect the actual scenario.

"Monthly and weekly numbers do not reflect correct picture. Therefore, you shall have to take the whole year into account. Let us see how it reflects in the annual picture," the finance minister told reporters in New Delhi.

The Reserve Bank of India had last month hiked key interest rates to combat high inflation and hinted at further tightening in the future. This could, however, have a dampening effect on industry as credit would get costlier.

Deputy Chairman of the Planning Commission Montek Singh Ahluwalia, too, said that not much should be read into the latest IIP figures.

"Month-to-month variation in the IIP should not occupy us too much. Also when it shoots up next month, don't assume that it's now going to continue at a very high rate," said Ahluwalia.