Industrial growth crosses expectations in August; India Inc. says it's still disappointing

12 October, 2012

India's industrial production rose by a higher-than-expected 2.7 per cent in August from a year earlier, after contracting in July at 0.2%. Manufacturing, which makes about 76 per cent of industrial production, rose an annual 2.9 per cent from a year earlier. In the April-August period, industrial production expanded an annual 0.4 per cent.

THE MINING sector has seen a growth of 2% during the month under the scrutiny. The sector has come out from its contraction of (-) 5.5% YoY. Commenting on the IIP figures, industry body CII said that the industrial growth rate is disappointing.

“The IIP figures of today are disappointing. What is of serious concern is the sharp drop in electricity production even as the manufacturing sector continues to stagnate due to faltering investments,” said Chandrajit Banerjee, DG, CII in a statement.

The poor industrial performance comes close on the heels of a lackluster performance of the core sector which showed a meager growth of 2.1 per cent in August, added CII. “While the recently announced reform measures have revived business confidence to some extent, what is required now is a commensurate action from the RBI with a cut in repo rate,” said Banerjee.

Another industry group, FICCI expressed hopes that the growth has bottomed out in July as we can see some upturn in mining and manufacturing sector in August. Recent government's initiatives and announcements have resulted in improved policy framework for the business and it is possible to achieve higher industrial growth by keeping up this momentum of reforms.

"Given the fact that electricity sector's growth is slowing down since April 2012, government should now ensure that it resolves the implementation issues like land acquisition, environmental clearances related to various infrastructure projects on urgent basis,” said RV Kanoria, President, FICCI, in a statement.