IIP growth numbers lack lustre
Use-based data show that capital goods have grown 5.9% y-o-y for May. But this is on top of the high 15.8% increase notched up in the like period last year.
By ET Bureau | Updated:
The latest estimate of industrial production is lacklustre, but not without promise. The index of industrial production (base 2004-05 = 100) has moved up to 165.3 for May, which denotes a 5.6% rise (over the like period last year, read year-on-year). And growth for April-May stood at 5.7% y-o-y, which is better than modest because it is on top of a solid 10.8% increase posted in the same period last fiscal.
Sectoral figures for May show that manufacturing (which has 75.5% weight in the index) have grown by 5.6% y-o-y, and that mining (weight 14.2%) output is down in the dumps with a mere 1.4% rise, what with long-pending policy reform still very much work in progress. The brightest spot in the sectoral breakup is in fact electricity (10.3% weight in the industrial index), with y-o-y growth for May a credible 10.3%.
Power output is clearly on the rise, thanks to capacity addition. But without stamping out routine power theft, stepped-up generation would merely rev up revenue leakage and systemic risks. The last mile in power distribution needs urgent policy attention.
Use-based data show that capital goods have grown 5.9% y-o-y for May. But this is on top of the high 15.8% increase notched up in the like period last year. Similarly, for April-May, capital goods growth adds up to just 6.6% y-o-y, but on top of a massive 25.2% rise seen during the same period last fiscal.
It suggests that capital goods output for this two-month period has grown at an average of over 15% for two years in a row, which implies still buoyant investment demand. Notice also the strong growth in May for segments like alloy steel (49%), textile machinery (41.3%), printed circuit board (63.7%) and commercial vehicles (32.1).
However, output in several sectors has actually declined for the month, such as textiles (-6.6%) and machinery and equipment (-5.1%), while that for chemical products is a lowly 4%. As for consumer goods (weight 29.8% in the index) output has gone up by 5.4%; how the consumer durables and the non-durables segment perform in the festive season and beyond would likely much affect overall industrial production.
Sectoral figures for May show that manufacturing (which has 75.5% weight in the index) have grown by 5.6% y-o-y, and that mining (weight 14.2%) output is down in the dumps with a mere 1.4% rise, what with long-pending policy reform still very much work in progress. The brightest spot in the sectoral breakup is in fact electricity (10.3% weight in the industrial index), with y-o-y growth for May a credible 10.3%.
Power output is clearly on the rise, thanks to capacity addition. But without stamping out routine power theft, stepped-up generation would merely rev up revenue leakage and systemic risks. The last mile in power distribution needs urgent policy attention.
Use-based data show that capital goods have grown 5.9% y-o-y for May. But this is on top of the high 15.8% increase notched up in the like period last year. Similarly, for April-May, capital goods growth adds up to just 6.6% y-o-y, but on top of a massive 25.2% rise seen during the same period last fiscal.
It suggests that capital goods output for this two-month period has grown at an average of over 15% for two years in a row, which implies still buoyant investment demand. Notice also the strong growth in May for segments like alloy steel (49%), textile machinery (41.3%), printed circuit board (63.7%) and commercial vehicles (32.1).
However, output in several sectors has actually declined for the month, such as textiles (-6.6%) and machinery and equipment (-5.1%), while that for chemical products is a lowly 4%. As for consumer goods (weight 29.8% in the index) output has gone up by 5.4%; how the consumer durables and the non-durables segment perform in the festive season and beyond would likely much affect overall industrial production.
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