Indian Industrial Production (IIP) growth slows for April; pressure for higher rates stays

India's industrial production grew at 4.4% in April Vs 7.3% in March as per old series. As per the new series, the IIP grew at 6.3% in April. 

The poor performance of the manufacturing and mining sectors pulled down the overall growth of industry as per the old series with a base year of 1993-94 from 16.6% in April last year.

Meanwhile, factory output in March was revised upward to 7.8% from the provisional estimate of 7.3% released last month.

As per the old series, growth in manufacturing, which constitutes about 80% of the index weight, nosedived to 4.4% in April from a high of 18% in the same month last year.

Mining also grew by a meager 2.1% during the month under review as against 12% in April, 2010.

Growth in electricity production also dipped to 6.4% in the month under review from 6.9% in the same period of the previous year.

Another area of concern was the low offtake of capital goods, whose production growth was just 2.5% in April, 2011, compared to 64.1% in April last year.

Overall, consumer goods also saw the growth rate slow to 5.9% in April from 11.9% in the same month last year, as per old series.

Meanwhile, as per the new series, manufacturing growth in April stood at 6.9 %, while mining and electricity production was up 2.2% and 6.4%, respectively.

Capital goods registered a growth of 14.5% and overall consumer goods were up by 2.9% in April as per the series with a base year of 2004-05.

The new series has 45% more items and has 2004-05 as its base year. The old series had 1993-94 as the base year.

Production trends for 100 new items, including ice cream, fruit juice and mobile phones, has been included for measuring the pace of industrial production in the new index series, which was recently approved by the government.

The new items in the IIP would also include computer stationary, newspapers, chemicals like ammonia, ammonia sulphate, electrical products like solder power systems, gems and jewellery and molasses.

On the other hand, obsolete articles like typewriters, loud speakers and VCRs have been taken off to make the series representative of the present-day industrial production and demand scenario.