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India's January IIP Growth Rate Dips

India's January IIP Growth Rate Dips

India's Index of Industrial Production, or IIP, with base 2004-05, for the month of January significantly declined to 6.8 percent year-on-year mainly due to sluggish growth in electricity, mining, basic goods, capital goods, intermediate goods and consumer durables.

Data released by the Central Statistical Organization of the Ministry of Statistics & Program Implementation on Monday showed that the IIP for January had a growth rate of 6.8 percent, down from 7.5 percent for the corresponding month last year.

Cumulative index of industrial production for the ten months of the current fiscal (with base year 2004-05) halved to 4.0 percent from the 8.3 percent in the corresponding period of last fiscal.

The data kept the estimated growth rate for December at 2.5 percent as per base year 2004-05, up from the earlier provisional figure of 1.8 percent.

Manufacturing sector's growth rate in December, with a weightage of 75.53 percent, witnessed a marginal growth of 8.5 percent compared to 8.1 percent in the corresponding month of the preceding year. Power sector growth declined by 3.2 percent from 10.5 percent for the corresponding month last year. Mining sector, which has been hit in multiple states by bans, witnessed a negative growth of 2.7 percent compared to a positive growth of 1.7 percent in January last year.

In terms of industries, 13 of the 22 industry groups showed a positive growth in January, compared to the corresponding month of the preceding year.

As per the use-based classification, capital goods sector growth recorded a negative growth of 1.5 percent compared to a positive growth of 5.3 percent last year.

In January, basic goods dropped significantly by 1.6 percent from the 7.7 percent of January last year, while intermediate goods growth was negative at 3.2 percent compared to a positive growth of 7.4 percent for the corresponding month last year.

In January, growth rate of consumer durables sector was negative at 6.8 percent compared to a positive growth of 12.5 percent as on last January, whereas non-durables recorded a strong growth of 42.1 percent from the.5.0 percent for the same month last year. As such, the growth rate of overall consumer goods grew by 20.2 percent from the 8.3 percent of last January.

India's eight core industries' growth having a combined weight of 37.90 percent in the IIP slowed to 0.5 percent in January, compared to 6.4 percent in January last year mainly due to slackening output of crude oil, steel, natural gas and petroleum refinery products.

In a bid to boost liquidity, the Reserve Bank of India (RBI) on Friday reduced the cash reserve ratio (CRR) to 4.75 percent from the present 5.5 percent effective March 10 ahead of the policy meeting.

By this cut, the RBI expects to inject around Rs.48,000 crore of primary liquidity into the banking system. The apex bank also expects the liquidity deficit to increase significantly during the second week of March due to advance tax outflows and the usual front-loading of cash balances by banks.

RBI's mid-quarter review is scheduled for March 15.

Finance Minister Pranab Mukherjee will present the 2012-13 budget on March 16, and is widely expected to announce measures to cut fiscal deficit and boost growth.

by RTT Staff Writer

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