Moneycontrol » News » Business » Economy

Aug IIP at 1.3% versus 10.9% YoY

Published on Fri, Oct 10, 2008 at 12:04 | Source : CNBC-TV18

Updated at Mon, Oct 13, 2008 at 10:11

Like this story, share it with millions of investors on M3

Share on Tumblr

Excerpts from Power Breakfast on CNBC-TV18 Watch the full show »

RELATED NEWS

BSE | NSE 10/02/12

The August Index of Industrial Production (IIP) numbers have come in at 1.3% versus 10.9% year-on-year (YoY). Manufacturing growth for August stands at 1.1% versus 10.7% (YoY), and the consumer durables growth for the period has come in at 5.1% against 6.2%.

Meanwhile, August capital goods number stands at 2.3% against 30.8% (YoY) and mining is at 4% versus 14.7% for the same period.

At the same time, the July industrial growth has been provisionally revised to 7.4% from 7.1%.

Speaking on the IIP numbers, M Govinda Rao, Director of National Institute of Public Finance and Policy (NIPFP) and member of the Economic Advisory Council (EAC) to the Prime Minister, said, "This is a significant deceleration. We are in industrial recession," adding that, "maybe we will have to revise the growth forecast now that there is a global financial crisis and a serious liquidity crunch in the Indian situation." However, he added that this was not the official position of the EAC.

Rao added that a 7% GDP growth rate is still achievable but said that we will have a much more serious problem during the next year.

You can read the verbatim transcript of M Govinda Rao's interview to CNBC-TV18 here.

Industrial growth has plummeted to a 10-year low and hit an abysmal 1.3% for August. How will this impact growth? The captains of India Inc are divided on the fallout.

Y M Deosthalee, CFO, L&T said, "Very frankly we haven't seen a very significant impact. Some of our product businesses have witnessed slowdown but those are relatively small--about 8-9 per cent of our businesses is in the product area; bulk of our business is in the projects."

Subba Rao, CFO, GMR said, "If there is an overall business slowdown, our power industry may not be affected but toll could be affected. Roads might have lower traffic because of lower economic activity. Also, there could be lower traffic in the airports, which we are already witnessing."

Seshagiri Rao, Director-Finance, JSW Steel said, "Internationally, the liquidity problem is becoming excessively acute. Dollar is not available. Indian companies used to get dollars in the form of buyers' credit and suppliers' credit in the international market; that has completely disappeared. Thus, most of the companies are turning to India to increase their working capital requirements. That itself is creating a lot of pressure on the local liquidity. So a lack of working capital is one of the very important factors for lower industrial production."

Venugopal Dhoot, Chairman of Videocon, said, "Last time the manufacturing activity had gone up, this time it has come down. Hence, it is a cyclical process. But on an average, manufacturing growth is very good in India presently."