Industrial growth rises to 7.2 pc in May

The manufacturing sector, accounting for about 80 per cent in the index of industrial production (IIP), had grown at only 4.1 per cent during the two month period last year while mining sector recorded a negative 1.5 per cent growth.

During May, this year mining sector nearly reversed the trend and started showing signs of recovery with a zero growth. However a negative growth of 0.3 per cent in the previous month pulled down this sector with a negative 0.2 per cent growth during the two month period. The electricity sector, which was the sole bright spot of the industry last year, however witnessed a reversal in trend with growth for April-May coming down to 4.1 per cent from 10.4 per cent. It came down further to 3.3 per cent in May 1999.

Meanwhile, the lead economic indicators like credit offtake, industrial and export growth rates and foreign investment signal a strong pick up for the economy in the first quarter (April-June) of the current fiscal year, a leading industry chamber has said.

Printing this optimistic scenario, the Associated Chambers of Commerce and Industry of India (Assocham) president KP Singh said, the quality of gorwth in the three months up to June which is the most crucial quarter in first half of the financial year is especially encouraging as the improved performance extends to both the domestic and external sectors.

More importantly, the figures clearly show that the build-up has been sustained and that the positive signals that were visible in the last quarter of 1998-99 have gathered further momentum and spread to more segments of the economy. Singh said the most recent numbers show that credit offtake in the economy has picked up for the first time in several years even while industrial growth rates inch closer to the two digit level.

Simultaneously, agriculture output in the first half of the current year is all set to better its performance over the levels achieved in the some period last year. And the downward pressures on both price levels and interest rates have continued to build up in recent months. But the most optimistic indicator of the strong recovery is assured reversal of the declining trends in domestic investment for the first time in several years. This signals the improved medium and long term business expectations of the industry.

“This commendable performance in the domestic sector has also been replicated on the external front. The trade deficit has been going down in in recent months as export growth rates have gone up faster than those of imports. And despite the overall decline in foreign investments in the last fiscal, the quarterly figures show significant improvement in inflows and this positive trend has stretched into the current year,” he said.