Index of Industrial Production (IIP) for the month of June 2006 has increased 9.6 per cent from the same month of previous year, according to quick estimates released by the Central Statistical Organisation. Industrial growth for the month was better than consensus estimates of marginally over 9 per cent, though growth has slowed down from a revised 11.13 per cent in May 2006.

For the same month of previous year, the growth rate was a much higher 12.2 per cent. It is commendable that growth has not slowed down as much as expected, despite the high base effect. If this performance is sustained for the rest of the year, overall economic growth would remain around 8 per cent per annum.

Helped by the upward revision in the growth estimates for May 2006 – 10 per cent as per initial estimates - industrial growth for the first quarter of the current financial year has moved into double digits at 10.1 per cent. Growth was at 10.4 per cent during the same period of last year.

Double digit growth in the manufacturing sector once again helped sustain the overall growth trajectory. Manufacturing expanded at a rate of 10.5 per cent after growing 12.64 per cent in May 2006 and 13.2 per cent during June 2005.

Electricity generation was the laggard as growth declined to 4.5 per cent from 9.6 per cent for June 2005. Mining output growth held steady at 4.8 per cent during June 2006.

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

Output of capital goods accelerated substantially during June 2006 at 23.7 per cent as compared to 13.5 per cent during the same month of previous year. Basic goods output went up by 8.4 per cent from 8.6 per cent growth in June 2005. Production growth of intermediate goods improved to 9.9 per cent from 4.2 per cent for the previous year month.

Growth in consumer goods output for the month declined substantially to 5.9 per cent from 23.7 per cent growth reported in June 2005. The decline was on account of a sharp drop in output growth of consumer non-durables declined to just 1.5 per cent from 27.5 per cent for the previous year month. Consume durables output growth sustained the up trend with a growth rate of 19.9 per cent for the month as compared to 12.8 per cent for June 2005.

Solid growth in volumes by the leading auto companies have shown that the sector is on a roll. This is further confirmed by a 22.9 per cent growth in output by the transport equipment and parts sector for June 2006 as compared to 26.7 per cent for May 2006.

Machinery and equipment, other than transport equipment, output growth accelerated to 18.4 per cent as compared to 15.3 per cent for the previous month.

Output growth in basic metal and alloy industries was 19.5 per cent for the month while production of non-metallic metals expanded 18.2 per cent. Other manufacturing industries recorded a growth of 25.8 per cent for the month.