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India's February IIP Growth Rate Drops Y-o-Y

India's February IIP Growth Rate Drops Y-o-Y
4/12/2012 3:01 AM ET

India's Index of Industrial Production, or IIP, with base 2004-05, for the month of February declined to 4.1 percent year-on-year, mainly due to sluggish growth in manufacturing, intermediate goods, consumer durable and consumer non-durable sectors.

However, growth rate for the reported month was significantly higher compared to the revised figure for January, due to wrong compilation of sugar production data.

Data released by the Central Statistical Organization of the Ministry of Statistics & Program Implementation on Thursday showed that the IIP for February had a growth rate of 4.1 percent, down from 6.7 percent for the corresponding month last year.

Cumulative index of industrial production for the eleven months of the current fiscal (with base year 2004-05) halved to 3.5 percent from the 8.1 percent in the corresponding period of last fiscal.

IIP for January has been revised significantly downward to 1.1 percent from the 6.8 percent, due to correction in the production data of sugar and also minor updation of data received from other source agencies.

Manufacturing sector's growth rate in February, with a weightage of 75.53 percent, slowed down to 4.0 percent, from the 7.5 percent in the corresponding month of the preceding year. Power sector growth rose by 8.0 percent from 6.8 percent for the corresponding month last year. Mining sector grew by 2.1 percent from 1.2 percent in February last year.

In terms of industries, 18 of the 22 industry groups showed a positive growth in February, compared to the corresponding month of the preceding year.

As per the use-based classification, capital goods sector growth recorded a growth of 10.6 percent, compared to a negative growth of 5.7 percent last year.

In February, basic goods expanded to 7.5 percent, compared to 5.5 percent of February last year, while intermediate goods growth was negative at 0.6 percent, compared to a positive growth of 6.3 percent for the corresponding month last year.

In February, growth rate of consumer durables sector was negative at 6.7 percent, compared to a positive growth of 18.2 percent as on last February, whereas non-durables recorded a lower growth of 5.1 percent from the 9.7 percent for the same month last year. As such, the growth rate of overall consumer goods contracted to 0.2 percent, compared to an expansion of 13.4 percent of last February.

India's eight core industries growth having a combined weight of 37.90 percent in the IIP expanded to 6.8 percent in February, compared to 6.4 percent in last February, mainly due to increased output of coal, cement, electricity and petroleum refinery products.

The Reserve Bank of India (RBI) is widely expected to cut the repo rate by 25 basis points to 8.25 percent to spur growth when it reviews policy on April 17. The apex bank has already cut banks' reserve requirement by 125 basis points in two moves since late January, infusing more funds into the system.

by RTT Staff Writer

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