IIP: Industrial growth weak and concentrated, says CRISIL
IIP: The weak and highly concentrated growth within the manufacturing sector is a major concern. The revival of the manufacturing sector is crucial for the recovery of the service sector given its positive spillovers to sectors such as trade, transport and finance, says CRISIL.
June 12, 2013 / 18:00 IST
CRISIL's report on economy
Growth in the index of industrial production (IIP) slowed down to 2.0 per cent in April from 3.4 per cent in the previous month. Fuel shortages, ongoing mining ban in some states, delays in commissioning of large projects, and moderation in demand continues to plague India’s industrial sector. Manufacturing growth remained weak at 2.8 per cent in April and came from only a handful of industries. In April, the output of top 5 industries - in terms of contribution to manufacturing growth- grew by 22.3 per cent compared to a year ago, while the output of the remaining 17 industries fell by 3.7 per cent. The weak and highly concentrated growth within the manufacturing sector is a major concern. The revival of the manufacturing sector is crucial for the recovery of the service sector given its positive spillovers to sectors such as trade, transport and finance.Among major industries, Wearing apparel registered a high growth of 86.6 per cent in April. If one excludes this industry, manufacturing growth in April would have been 0.4 per cent.Shortages in coal and natural gas led to a deceleration in electricity output growth to 0.7 per cent in April from 3.5 per cent in March. The power sector in India is increasingly reliant on imported coal due to shortages in domestic coal production. The recent depreciation of the rupee will raise the rupee cost of imported coal and intensify the input constraints being faced in electricity production.Capital goods growth fell sharply to 1.0 per cent in April from 9.0 per cent in the previous month. Consumer goods output grew, aided by a growth in output of consumer non-durables. Consumer durables’ output, in contrast, continued to decline for the fifth consecutive month, suggesting a weak household demand.Output of the eight core infra industries, having nearly 38 per cent weight in IIP, decelerated to 2.3 per cent in April from 3.2 per cent in the previous month. A fall in coal, natural gas and fertiliser production was largely responsible for the slowdown. A revival of India’s industrial sector is contingent upon a turnaround in the performance of core industries.Disclaimer: CRISIL Limited has taken due care and caution in preparing this Report. Information has been obtained by CRISIL from sources, which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL Limited has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this Report. The Centre for Economic Research, CRISIL (C-CER) operates independently of and does not have access to information obtained by CRISIL's Ratings Division, which may in its regular operations obtain information of a confidential nature that is not available to C-CER. No part of this Report may be published / reproduced in any form without CRISIL's prior written approval.© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"
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