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Last updated: 14 Apr, 2015  

Manufacturing.9..Thmb.jpg Industrial output data signals turn of cycle

Manufacturing.9.jpg
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Bikky Khosla | 14 Apr, 2015
Industrial production for February grew to 5 percent, compared to 2.8 percent y-o-y in January. This growth can largely be attributed to a low base effect, but it is difficult to ignore the green-shoots of economic recovery and sustained IIP growth. During the April-February period of 2014-15, the growth rate stood at 2.8 percent, as against 0.1 percent contraction in corresponding period of previous fiscal. These figures tell us enough. I believe the industry has already bottomed out and the economy appears on the verge of a turnaround.

It is encouraging to see that manufacturing output, which constitutes over 75 percent of the IIP index, grew by 5.2 percent in February 2015, compared to a contraction of 3.9 per cent in February 2014. For the April-February period, manufacturing output grew 2.2 percent, while during the corresponding period of the previous year, there had been a contraction of 0.7 percent. Only seven of the 22 manufacturing sub-sector posted negative growth in the month of February. Among the gainers are the mining and the power sectors, and I hope the recent successful coal block auction will result in further growth of these sectors and translate into higher manufacturing activity.

Another encouraging indicator in the data set is the continuing robustness of the capital goods sector. The growth of the sector, which stood at 8.8 percent for the month as against a contraction of 17.6 per cent in February 2014, and at 6 percent in the April-February period as against a dip of 2.6 percent during the corresponding period previous year, indicates a pick up in investment activity in the economy. At the same time, that data showing 5.2 percent overall consumer goods output growth in February - though consumer durable production declined 3.4 percent in the month - gives an improving picture of demand.

Meanwhile, Moody's raised India's credit rating outlook to 'positive' from 'stable'. The global rating agency has viewed that the change in outlook is based on an increasing probability of actions by policymakers enhancing economic strength. I think they have rightly sensed the growth mood of the government. We have some more good news: RBI's tough talk has forced some banks to cut down interest rates and retail inflation for March eased to a three-month low. These developments are welcome. During the last few months, macroeconomic prospects have improved significantly, driven by the Centre's continuous efforts, which, if continued, will certainly make a big difference in the coming months.

I Invite your opinions.
 
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Expansion of industrial production
Srivathsan.R. | Wed Apr 15 02:50:57 2015
It is a good news that Industrial production is increasing. Industrial production will gallop if the following measures are taken by all stake holders in production. Sakal payment by government bodies of all ministries, govt.Aided bodies of all departmental, Autonomous bodies like universities, and corporate bodies, PSU etc and all firms ( manufacturing or service sector Pay their service providers and suppliers within 45 days without any exception except which are under litigation . The money cycle must rotate within 45 days( example( it rotates within 7 days in Building sector and rotates in Advance in all tax matters, Hospitals receive money before providing service, Telephone within 30 days, electricity with in 25 days and hence all sharecrops must complete their financial transaction within 30 to 45 days and no excuse. This will reduce cost of finance and products become cheaper and exportable.


 
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