India’s industrial output up only 4.4 percent in September

NEW DELHI - India’s industrial production grew at a disappointing 4.4 percent in September, compared to 8.2 percent in the same month of the previous fiscal, as decline in capital goods output along with a base effect pulled down the index, according to data released Friday.

The straight two month fall in the index of industrial production (IIP) is also worrying the government, which expects the economy to grow by 8.5 percent this fiscal. A worried Finance Minister Pranab Mukherjee said: “We will have to examine the reasons behind this fall.”

During the first half of the fiscal, industrial output averaged at 10.2 percent. The IIP for August 2010 was revised upwards to 6.9 percent from the earlier 5.6 percent.

Though 14 out of the 17 industries, which constitute the IIP, posted positive growth in September, the quantum of increase was modest, as per data released by the Central Statistical Organisation (CSO).

The manufacturing sector, which constitutes a major chunk of IIP, grew at 4.5 percent in August compared to 11 percent in the same month an year ago.

“Manufacturing sector’s growth is on the expected lines as monetary tightening by Reserve Bank of India was going to moderate the growth of the sector. Important sectors like chemicals, metals and machinery have registered negative growth in September,” said Amit Mitra, secretary general, FICCI.

Electricity generation too was in slump, nudging up just 1.7 percent in the month under review as against 3.8 percent in August 2009.

The mining sector grew at a relatively faster rate of 5.2 percent in September, compared to 8.7 percent last year.

Capital goods saw output declining by 4.2 percent in September.

Among other sectors, intermediate goods production rose 10.3 percent while basic goods output was up 3.5 percent.

Consumer goods recorded an overall growth of 5.2 percent, with consumer durables logging a 10.9 percent increase in output and consumer non-durables production rising 2.5 percent.

“In the light of IIP data, we would urge the government to re-look at its monetary measures and intervene in time to arrest this slowdown in manufacturing sector,” added Mitra.

The stocks markets dived sharply over the disappointing IIP numbers with the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange ending 432.20 points or 2.1 percent to 20,156.89 points.