CARE Ratings has come out with its report on industrial growth in February 2013. According to the rating agency, the manufacturing sector registered a growth of 2.2 percent in the current month backed by a significantly high growth of 73 percent on electrical machinery; excluding this industry would have resulted in manufacturing growing by -0.9 percent in February.
The Central Statistics Office (CSO) has released the data for industrial production for the month of February 2013. IIP in the month of February registered growth of 0.6 percent as against a growth of 4.3 percent in February 2012. This number, though low, has come well over a negative growth rate expected for the month mainly due to a high growth rate in the electrical machinery component. The manufacturing sector registered positive growth of 2.2 percent in the current month. Cumulative growth in FY13 in Apr- Feb stands at 0.9 percent as against a growth of 3.5 percent in corresponding period of the previous year. Cumulative Picture: (Apr- Feb FY13 over Apr- Feb FY12)- Mining registered -2.5 percent growth in April – Feb 2013, as against -2.1 percent during the same period last year
- Manufacturing registered a growth of 1.0 percent in April - Feb 2013, when compared with 3.7 percent in April - Feb 2012.
- Relatively high growth rates witnessed in case of radio, TV etc, coke, refined petroleum, textiles and luggage etc.
- Growth in electricity has moderated to 4.0 percent in April – Feb 2013, as against 8.7 percent in same period last year.
- The manufacturing sector registered a growth of 2.2 percent in the current month backed by a significantly high growth of 73 percent on electrical machinery; excluding this industry would have resulted in manufacturing growing by -0.9 percent in February.
- In the manufacturing sector, 13 out of 22 industries have registered positive growth during the month of February 2013
- Electrical machinery and apparatus has shown highest growth of 73 percent, followed by 'Wearing apparel, dressing & dyeing of fur' growing by 18.5 percent. Other industry groups which showed healthy growth include 'Luggage, handbag, saddler etc' (12.6 percent), Tobacco products (11.2 percent), other transport equipment (7.2 percent) and chemical and chemical products (5.1 percent).
- Industries that have registered negative growth include Medical, precision & optical instruments (-27.6 percent), publishing, printing & reproduction of recorded media (-25.6 percent), Motor vehicles, trailers & semi-trailers (-17.8 percent) and office, accounting & computing machinery (-11.4 percent).
- As per the Use-based classification, decline is seen in the performance of 'capital goods', registering -7.6 percent growth during eleven-months period of FY13, indicating a lower level of investment.
- Basic goods grew by 2.3 percent for Apr- Feb FY13 compared with 5.9 percent for the same period last year.
- Intermediate goods increased by 1.5 percent (-0.7 percent).
- Consumer durable and consumer non-durable goods have witnessed growth of 2.7 percent and 2.3 percent respectively, with the overall growth in Consumer goods being 2.5 percent for Apr- Feb FY13.
- Mining is estimated to grow by 0.4 percent. So far during Apr – Feb 2013 it has grew by -2.5 percent; in order for the same to attain the estimated target, this sector has to grow by 26.9 percent in the remaining one month. The index rose significantly in March last fiscal making it difficult to attain the required growth on a high base.
- For FY13 (Apr- Feb) the performance of the electricity sector was in line with expectations, however this sector registered a negative growth in the current month. For this segment to grow by 4.9 percent as estimated by CSO; electricity needs to register a high growth of 13.9 percent in the month of March; the same seems far from attainable.
- Manufacturing sector has shown a growth of 1.0 percent during Apr-Feb 2013. In order for the same to attain the estimated target, this sector has to grow by 11.0 percent in the remaining one month. It does look difficult for the CSO numbers to be attained and therefore, the contribution of the industrial sector to GDP growth would be lower than has been projected by the CSO.
The Reserve Bank of India (RBI) in its last policy review cut policy rates by 25 basis points to boost growth as inflation showed signs of moderation. The RBI's monetary policy action has been primarily influenced by the inflation numbers. The March CPI number came in at 10.4 percent showing moderation when compared with 10.9 percent in February. However, it is still high for comfort and therefore there is reason to believe that there will not be any rate action in the May policy. Disclaimer: This report is prepared by the Economics Division of Credit Analysis & Research Limited [CARE]. CARE has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to the user of this report. The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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