labels: Economy - general
Industrial production slumps to 1.3 per cent in August news
10 October 2008

Mumbai: Industrial production growth in the country plummeted to a low of 1.3 per cent in August, showing signs that recession is setting in.

The index of industrial production (IIP) slumped to a low of 1.3 per cent year-on-year in August this year, compared to around 6.0 per cent the month earlier and 10.9 per cent for the same month of the previous year.

Figures provided by the Central Statistics Office show that the seasonally adjusted volume of industrial production for the three months from June to August fell by 1.9 per cent compared to the previous three month period.

The main contributors to the increase was a near 21 per cent rise in reproduction of recorded media and an 18.8 per cent increase in the production of basic chemicals.

However, the CSO figures show that the modern sector, which is made up of high-technology and chemical sectors, enjoyed an annual increase in production of 7.5 per cent while the traditional industrial sectors registered a decrease of 3.4 per cent.

The decline in August index of industrial production (IIP) numbers follows a decline in manufacturing growth for August at 1.1 per cent against 10.7 per cent (y-o-y).

Growth in consumer durables for the period has also came down to 5.1 per cent against 6.2 per cent.

Capital goods sector grew at 2.3 per cent against 30.8 per cent (y-o-y) and mining at 4 per cent versus 14.7 per cent for the same period.

The July industrial growth has been provisionally revised to 7.4 per cent from  7.1 per  cent.

The index of industrial production grew at 6.2 per cent y-o-y in April, 4.4 per cent y-o-y in May, 5.4 per cent y-o-y in June and then 7.4 per cent in July.

''This is a significant deceleration. We are in industrial recession," said M Govinda Rao, director of National Institute of Public Finance and Policy (NIPFP) and member of the Economic Advisory Council (EAC) to the prime minister.

''This is a significant deceleration. We are in industrial recession," adding, ''maybe we will have to revise the growth forecast now that there is a global financial crisis and a serious liquidity crunch in the Indian situation.''

''Maybe we will have to revise the growth forecast now that there is a global financial crisis and a serious liquidity crunch in the Indian situation," Rao said.

However, he added that this was not the official position of the EAC.

Meanwhile, the wholesale price based inflation for the week ended 27 September fell to 11.8 per cent from 11.99 per cent in the previous week.


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Industrial production slumps to 1.3 per cent in August