Industrial growth falls to 4.8% in Aug

The manufacturing sector, accounting for more than three-fourths of the weightage in the IIP, fell quite sharply to 5.0 per cent in August this year as against 7.4 per cent registered last year.

Cumulative growth in the manufacturing sector during April-August also declined to 5.6 per cent compared to 6.8 per cent in the previous year. The mining sector, however, continued its upward trendand recorded a growth of 6.8 per cent in August 2000 compared to 1.7 per cent in the same month last year. The five-month performance was even better at 4.7 per cent as against negative 0.3 per cent in April-August last year.

Power sector also recorded a poor growth with 0.6 per cent in August as against a healthy 10.9 per cent growth rate in the same period last year, IIP figures said, adding that April-August growth fell marginally to 3.7 per cent compared to 6.1 per cent in the corresponding period last year.

Analysts expressed concern over the numbers and said the economy would grow less rapidly than estimated earlier. "In this scenario, there isn’t much the government can do toboost growth by increasing its spending as it has its own budgetary compulsions. I expect gross domestic product (GDP) at 5.8-6.0 percent," said Kamal Sen, director at Anand Rathi Securities.

The government has said it hopes to log seven per cent GDP growth in 2000/01 (April-March). Earlier this week, the Reserve Bank of India lowered its estimates for real GDP growth in 2000/01 to 6.0-6.5 per cent from 6.5-7 per cent forecast earlier.

The capital goods sector showed a negative 0.8 percent growth in April-August compared with 11.8 percent growth during the same period a year earlier. In August, the capital goods sector showed a negative 2.1 per cent growth compared with 12.4 percent in the same month a year ago.

The Centre For Monitoring Indian Economy (CMIE) warned last month that lower capital goods production threatened future growth prospects. The consumer durables and consumer goods sector displayed robust growth both during the April-August period as well as in August.

The consumer goods sector grew 7.5 percent in April-August compared with 3.0 per cent in the same period last year while in August the sector grew 5.0 per cent compared with 5.4 per cent in August 1999. The consumer durables sector recorded growth of 22.1 per cent in April-August compared with 14.8 per cent during the year-ago period.

But analysts said they did not expect the industrial output figures to have any impact on the stock market. "We don’t expect this to have much of an impact on the stockmarket as slower growth rates have already been factored in. Production figures for various commodities are known and share prices already reflect this," said Prateek Agrawal, assistant vice-president of research at SBI capital Markets.