By IANS,
New Delhi : India’s industrial production continued to grow at a sluggish pace, registering a 7.1 percent expansion in July, though there was a slight improvement over the month before, official data showed Friday.
The country’s index of industrial production (IIP) registered a 5.7 percent growth between April and July, compared with 9.7 percent in the same period last year, as per the new data.
In June, the index had moved up by just 5.4 percent, while industrial growth rate for the April-June period was 5.2 percent.
“The slow pace in industrial sector is certainly bad. It is a substantial drop,” said G.K. Chadha, member, the prime minister’s Economic Advisory Council (EAC).
“The real picture, however, will emerge only after a year. The monthly or quarterly trends are not so reliable. It is quite a risky proposition to draw any conclusion based on the monthly trends,” Chadha, a former vice-chancellor of Jawaharlal Nehru University (JNU), told IANS.
Among the three major sectors that comprise the index, the sub-index for manufacturing was up 6.1 percent during April-July, while electricity and mining moved up 2.6 percent and 4.5 percent, respectively.
In the corresponding period last year, the manufacturing and electricity sub-indices rose 10.5 percent and 8.1 percent respectively.
The output of mining expanded at a relatively lower pace of 2.7 percent in April-July last year, which moved up to 4.5 percent during the corresponding period the current fiscal, said the IIP released by the Central Statistics Organisation (CSO) under the statistics and programme implementation ministry.
A global rating agency has predicted a momentum in India’s industrial production growth in the current fiscal in view of “a gradual” recovery in demand side.
“For 2009, industrial production (of India) is expected to rebound thanks to a gradual recovery in global demand,” said Sherman Chan, a Sydney-based economist with Moody’s Economy.com.
“Ongoing improvement to infrastructure will also help to support further expansion of the Indian manufacturing sector. Industrial output growth for next year will likely come in at around 7.5 percent,” added Chan.
A sluggish industry sector clouds India’s economic prospects, faced with double-digit inflation of 12.1 percent for the week ended Aug 30, while the gross domestic product (GDP) logged 7.9 percent growth in April-June this year as compared to 9.2 percent in the last corresponding period.
The EAC, in its “Economic Outlook Report 2008”, has projected a 7.7 percent GDP growth in the current fiscal against nine percent in 2007-08, and has suggested “coordinated policy action” to bring inflation down to “eight-nine percent by March 2009.”