Industrial growth slips to 4.2

In fact, the manufacturing sector posted a negative growth in March this year to account for an overall 3.6 per cent rate of growth during 1997-98 as against a strong 8.6 per cent growth recorded during 1996-97, the data revealed.

As per the index of industrial production IIP released by the planning and programme implementation ministry here, the electricity sector8217;s performance was the most notable during the year under review. The sector, which accounts for less than one-sixth the total IIP base: 1980-81=100, grew by 7.7 per cent in March toend up with a cumulative growth of 6.8 per cent against 3.9 per cent in 1996-97. The mining sector growth at 4.9 per cent came over a 0.4 per cent growth rate recorded during the previous financial year.

The overall industrial performance was poorer in March as is evident from the 0.7 per cent decline in the general index which slipped to 341.7 points as compared to 344.2 a year ago.

The poor show by manufacturing sector was largely due to a negative growth in capital goods sub-sector, the data said. As against a 5.9 per cent growth in 1996-97, this key segment of manufacturing industry posted a negative growth of 4 per cent during 1997-98, with growth during March showing a massive deceleration of 22 per cent.

The IIP quot;use-based classificationquot;, which analyses growth in manufacturing sub-sectors, shows comparatively poor growth rates for all the key segments, barring consumer goods or more specifically consumer durables white goods.

The durables segment, which accounts for only 2 per cent of thetotal IIP use-based, grew by 9.9 per cent during the year as against a growth of 5.4 per cent in 1996-97. The flip side of the coin is that growth in the overall consumer goods sector, made up of durables and non-durables, showed only a modest improvement at 4.6 per cent in 1997-98 as compared to 4.1 per cent a year ago.

The main cause for this difference is the poor rate of growth in non-durables segment, comprising food processing sector and the like, which stood at 2.9 per cent compared to 3.7 per cent during 1996-97. The basic goods segment, which takes into account growth in core sectors like steel and cement, grew by a robust 7 per cent during 1997-98 as against a higher growth of 8.1 per cent a year ago. This could be attributed to the poor performance of the construction industry, a major end-user for both cement and steel, the data said.

Despite the fact that the month of March is considered a bad period for industrial activity, this segment had grown by 8.6 per cent in this period last year ascompared to just 4.9 per cent this year. Despite a strong recovery towards the end of fiscal 1997, intermediate goods growth rate also ended up strongly lower at 6.9 per cent compared to 9.8 per cent in 1996-97.

On a point-to-point comparison, seven out of the 16 sub-sectors of manufacturing sector posted negative growth with wood and wood products showing lowest 28.2 per cent negative growth followed by transport equipment at minus 18.7 and machinery and machine tools at minus 16.5.