14.3.09

IIP January 2009 Snapshot



India's industrial output fell by 0.5% year-on-year in January, but a strong showing by the consumer durables and capital goods sectors helped lift the sense of gloom, as economists predicted a recovery was underway and numbers would improve in the months ahead. Industrial output, as measured by the index of industrial production (IIP), for January was weighed down by poor output from intermediate goods such as auto ancillaries and chemicals and basic goods, which fell 9.2% and 1 %, respectively, according to provisional estimates released by the Central Statistical Organisation. However, consumer durables output grew 2.5%, moving into positive territory after three months of decline, on the back of high growth in automobile sales. But capital goods sector saw strong growth, with output rising 15.4%, led by an impressive expansion in production of machinery and equipment. “The improvement in production of consumer goods hints at a demand pick up and improvement in credit availability. The worst quarter is behind us, and on revisions, I expect the industrial growth for January to be above 1% and to be in the 2.5%-3% range for the next two months,” said HDFC Bank chief economist Abheek Barua. He was not alone in predicting a revision in the January figures.

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