13.6.13

April IIP figures


India’s industrial output growth remained sluggish in April due to weakness in manufacturing, mining and electricity sectors triggering calls for interest rate cuts and faster implementation of delayed projects to revive growth.
Data released by the Central Statistics Office (CSO) showed the index of industrial production (IIP) rose 2% in April, slower than the upwardly revised 3.4% in the previous month but slightly better than the decline of 1.3% in April 2012.
The industrial sector has remained anaemic for the past two years due to a combination of factors, which include high interest rates, the global economic slowdown and delay in project implementation. Slowing investment has added to the problem. The sector grew 1%, the slowest pace of growth in two decades in 2012-13, attracting urgent steps to reverse the trend.
The manufacturing sector, which accounts for nearly 75% of the index, rose 2.8% in April, marginally better than the decline of 1.3% in April 2012 while the electricity sector grew a paltry 0.7% in April compared with 4.6% expansion in the year-ago period.
The mining sector continued to languish, declining 3% compared to a fall of 2.8%. Delayed approvals and policy lethargy have added to the woes of the crucial sector.
“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,” rating agency Crisil said in a note.
The capital goods sector, a key gauge of industrial activity, rose 1% compared to a decline of 21.5% in April 2012. The sector has remained volatile for the past two years and experts have raised doubts about the quality of data. The consumer durables sector fell 8.3% in April compared with an expansion of 5.4% in April 2012.
Overall, growth has slowed to a decade low of 5% in 2012-13 posing a fresh challenge to policymakers to revive growth ahead of the 2014 general elections.


Retail inflation moderated for the third consecutive month in May on the back of easing prices of some food items but held above 9%, complicating the policy choice for the central bank. Government data showed the general consumer price index (combined) for May stood at 9.31%, marginally lower than previous month’s 9.39%. 

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