July industrial growth slows down to 0.5 pc

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SME Times News Bureau | 13 Sep, 2014
Industrial production growth fell to a four-month low of 0.5 percent in July, led by a decline in manufacturing output and lower off-take of consumer durables, dashing hopes of recovery, reports media.

The factory output, as measured by the Index of Industrial Production (IIP), had grown by 2.6 percent in July, 2013.

Additionally, according to data released by the Central Statistics Office (CSO), IIP for June has been revised upwards to 3.9 percent from the provisional estimates of 3.4 percent released in August.

During the April-July period of the 2014-15 fiscal, IIP has recorded 3.3 percent growth, as against contraction of 0.1 percent in the same period of 2013-14.

According to the IIP data, manufacturing - which constitutes over 75 percent of the index, contracted 1 percent in July, compared to 3 percent growth in output a year ago. For April-July, the sector has grown at 2.3 percent, compared to 0.1 percent contraction in the year-ago period.

Sidharth Birla, President, FICCI, said, "While we were hoping that slowdown in manufacturing had bottomed out, it appears from July numbers that manufacturing may not out be out of the woods." Adding, he said, "It is worrying that deceleration in July is somewhat broad based extending to consumer durables and capital goods."

"We look forward to the positive investment and infrastructure driven environment, and a robust decision making mechanism to improve ease of doing business, as also indicated by Hon. Prime Minister, to fully carry forward the policy of Make in India and boost manufacturing," said Birla.

Commenting on the index of industrial production for July 2014, Chandrajit Banerjee, Director General, CII said that the muted performance of the industrial sector, with IIP expanding at the slowest pace in three months, on the back of the negative growth of the manufacturing sector indicates that full fledged industrial recovery could still be some distance away.

However, anecdotal evidence suggests some pick-up in new orders. A sustained recovery would be indicated by an improvement in off-take of commercial credit by industry.

The government has undertaken significant reforms and is receptive to industry concerns and the industry sentiments are strong. The good news from today's data is the moderation in consumer price inflation as indicated by the decline in consumer price index to 7.8 percent in August as against 7.96 percent in July.

The consumer goods output contracted by 7.4 percent in July compared, to 0.7 percent contraction logged a year ago.

For April-July, the segment shows a contraction of 4.5 percent, compared to a decline of 1.8 percent in the same period of 2013-14.

The consumer durables segment declined by 20.9 percent in July, as against a dip of 9.6 percent a year ago. For April-July, it declined 12.5 percent as against a dip of 11.9 percent in the four month period of last fiscal.

Consumer non-durable goods output grew at 2.9 percent in July, compared to 7.4 percent in same month last year. During April-July, the segment has grown at 1.3 percent compared to 7.2 percent in same period last fiscal.

Overall, 12 of the 22 industry groups in manufacturing showed positive growth in July.