March IIP to be low; output to rebound in April: Basu

The government today said it expects the country's industrial output growth to remain low in March, continuing the trend of the previous few months, but looked forward to a sharp recovery in factory output numbers during April.

"Our expectation is that the next month (March) will not be a good month. So there is one more difficult month ahead for us which is the month of March...we will see no growth in the industrial sector. But I do expect a big turnaround in the month of April," Chief Economic Advisor Kaushik Basu told reporters here.

He said "a big rebound" is expected in the April numbers, the results for which will be out in June. Basu''s comment came following release of the latest data which showed the factory output, measured in terms of the Index of Industrial Production (IIP), dipping to 3.6% in February as against 15.1%  in the same month of last year.

Poor performance of manufacturing and mining sectors pulled down the industrial growth rate in February. During April-February period of 2010-11 fiscal, industrial growth slowed to 7.8%, from 10% in the same period of the previous financial year.

The government also revised the IIP for January to 3.95% from the earlier estimate of 3.7%.

These figures follow similar kind of low growth in factory output witnessed in November 2010 when it rose by 2.7% and December (2.53%).

The last major jump in industrial production happened in October last year when it expanded by 11.29%.

Experts have attributed the low growth in factory output to high base and slowdown in investments.

However, senior officials, including Planning Commission Deputy Chairman Montek Singh Ahluwalia, said the low industrial growth would be compensated by record farm output and help the economy achieve the projected GDP growth of over 8.5% for 2010-11.

The low numbers in February were on account of slippages in performance of capital goods and basic goods sector, though consumer goods sector continued to post good results.

Capital goods contracted by 18.4%. The sector had expanded by a robust growth of 46.7% in February, 2010. In February, manufacturing growth plummeted to 3.5% from 16.1% during the same period a year ago.

Overall consumer goods reported a rise of 11.1% as against 6.3% in February last year.

Mining growth also plummeted to 0.6% in the month under review from 11% in the comparable month of 2010. Electricity generation output rose by 6.7% in February, compared to 7.3% growth in the same month last year.