THE Index of Industrial Production (IIP) for September slackened to 6.4%—almost half last year’s growth, pulled down by the manufacturing sector, especially the consumer durables segment. The index for the same month last year stood at 12%.
For the first half of this fiscal (April-September 2007) too, IIP slipped to 9.2% against 11.1% in the same period a year ago, an official release said on Monday.
In September, the manufacturing sector growth decelerated to 6.6% compared to 12.7% in the same month last year. The consumer durables sector took the hardest hit, posting a 7.6% fall in output during the month, under IIP’s used-based classification. The consumer non-durables sector posted a 2.2% growth. “The recent slowdown in the economy is on account of slackening of consumer durables sector. But the capital goods industry retains its vibrancy,” finance minister P Chidambaram said, inaugurating the annual Economic Editors’ Conference here.
The FM also warned that the hardening of fuel, food and commodity prices will have consequences on the economy. “I don’t think we can draw conclusion from one month’s figure, but overall services and industry are likely to grow between 9-10% this fiscal, perhaps close to 10%. This means 83% of the Indian economy will grow between 9-10%,” he said. The capital goods sector justified the FM’s confidence, with a healthy growth of 18.6% in September compared to last year’s 9.5%. Capital goods sector covers factories, machinery and tools used to produce finished goods. The capital goods output during the first half of this fiscal improved to 19.6% from 17.5% a year ago.
Saumitra Chaudhuri, member, Economic Advisory Council to the Prime Minister, who is also ICRA’s economic advisor said, “Consumer durables is one sector, which is pulling down and looks clearly in trouble. This could be because of high sales last year and high interest rates. But it is too early to say that it is (an) indication of a trend. There is no general slowdown. Impact of rupee appreciation is being felt on non-transient sector like garments.”