ICRA sees downtrend in IIP numbers to continue
IIP: Largely in line with our expectations (0.3%), industrial production displayed a marginal 0.1% rise in July 2012 reflecting the impact of a deficient monsoon on domestic consumer demand, a substantial decline in exports and continuing sluggishness in investment sentiments.
September 12, 2012 / 17:13 IST
By Aditi Nayar, Senior Economist, ICRA Ltd
Largely in line with our expectations (0.3%), industrial production displayed a marginal 0.1% rise in July 2012 reflecting the impact of a deficient monsoon on domestic consumer demand, a substantial decline in exports and continuing sluggishness in investment sentiments.The concerns regarding the rainfall deficit prevailing during the first half of the monsoon season and the resultant uncertainty in the outlook for consumer demand impacted production levels, contributing towards the low 0.7% growth of consumer goods in July 2012. This trend may persist in the immediate term, as highlighted by the contraction in production of two-wheelers in August 2012. Additionally, a contraction in hydro-electricity generation and prioritization of power for irrigation purposes impacted the availability of electricity for the manufacturing sector. The easing contraction displayed by the capital goods index in July 2012 (-5%) relative to the previous month (-28%) largely benefits from a benign base effect, even as investment activity remains weak in light of the continuing regulatory and policy issues. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
