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Industrial growth bounces back

business Updated: Oct 12, 2007 22:56 IST
Arun Kumar and Gaurav Choudhury

Industrial growth staged a rebound in August recording a growth of 10.7 per cent after a steep fall in the previous month that had sparked concerns of an impending slowdown.

The electricity and mining sectors powered the reversal as the Index of Industrial Production (IIP) grew by 10.7 per cent in August as compared with 10.3 per cent in the corresponding period last year.

In July IIP had grown by 7.5 per cent. However, the cumulative growth during the first five months (April-August 2007-08), was down to 9.8 per cent from and impressive 11.0 per cent during the same period of the previous year.

The mining sector led the growth reversal and recorded a growth of 17.1 per cent – a significant turnaround from a negative 1.7 per cent growth a year ago.

Electricity generation during August grew by 9.2 per cent as compared with 4.1 per cent a year ago. The manufacturing sector clocked a growth of 10.4 per cent, which was lower than the growth rate of 11.9 per cent recorded during the corresponding month last year.

As per the use-based classification of the industry, the capital goods sector recorded a sharp growth of 30 per cent in August over 16.6 per cent a year ago.

However, the high interest rates appeared to have affected the growth of certain sectors that are sensitive to borrowing rates. Consumer durables sector, that includes goods such as refrigerators, televisions and other white goods, clocked a negative growth of 6.2 per cent as compared with a blistering 19 per cent growth in August 2006.

The basic goods and intermediate goods, however, recorded growth rates of 13.3 per cent and 12.3 per cent respectively during August, as against 4.8 per cent and 8.7 per cent in the corresponding period last year.