Index of Industrial Production (IIP) for the month of May 2006 has increased 10 per cent from the same month in the previous year, according to quick estimates released by the Central Statistical Organisation. Industrial growth was 9.5 per cent in April 2006 and the latest estimate confirms that there is no letup in growth.

However, the growth rate is lower than 10.8 per cent reported for the same month of previous year. This is unlikely to cause any major concern as the decline is only modest.

For the first two months of the current financial year, industrial output growth is at 9.8 per cent – modestly higher than the 9.5 per cent during the same period of last year.

Manufacturing was the star sector for the month with a growth rate of 11.3 per cent after growing 10.4 per cent in the previous month. Growth in electricity generation slowed down modestly during the month to 4.7 per cent from 5.6 per cent for April, but is substantially lower than 10.5 per cent reported for May 2005.

Mining output growth also slowed down to 3 per cent from 4.3 per cent during the previous month and 5.2 per cent during May 2005.

IIP captures the six basic infrastructure sectors like mining, electricity generation, cement, steel etc covered under the infrastructure index besides manufacturing.

Capital goods output growth for May was at 20.5 per cent as compared to 24.9 per cent during the previous month. Output of basic goods went up by 9 per cent following a 9.1 per cent growth in April. Production of intermediate goods jumped to 8.6 per cent from 5.3 per cent in April.

Growth in consumer goods output for the month at 9.1 per cent bettered the 8.7 per cent growth reported in April. Output growth of consumer non-durables declined to 5.9 per cent from 10.6 per cent for the previous month. But this was more than compensated by an 18.3 per cent surge in durables output growth, from 8 per cent for April 2006.

Among various industries, basic metals and alloys sustained the growth rate with a 21.2 per cent expansion after growing 20.7 per cent during the previous month. Production of equipment other than transport equipment also grew at a faster pace of 15.3 per cent following a 11.8 per cent growth rate in April.

Transport equipment and parts output growth doubled to 26.7 per cent from 12.7 per cent during the previous month. Paper & paper products, basic chemicals, beverages & tobacco and rubber, plastic & petroleum products were the other sectors, which reported double digit growth for the month.