Industry output jumps, worries remain

The manufacturing sector, which has around 80 per cent weight in the IIP, rose nine per cent during 1999/2000 compared with 4.3 per cent in the previous year. The mining sector which has around 10 per cent weight in the index, rose by 0.6 per cent during the fiscal year, compared with a 1.7 percent decline in the previous year while the electricity sector rose marginally to 6.6 per cent from 6.5 per cent.

The electricity sector also accounts for around 10 per cent of the index. But analysts sounded a note of caution. "Looking ahead it seems the tight fiscal situation and the massive borrowing programme of the government will put the brakes on a sustained industrial growth," said Pradeep Srivastava, chief economist at the National council of Applied Economic Research.

Analysts fear that the government’s gross borrowings, budgeted at a staggering Rs 1,17,00 crore ($266.4 billion) for 2000/01, will push up interest rates later this fiscal year, dampening industrial growth.

Analysts also said the drought affecting five states and a poor monsoon forecast could affect agricultural output and depress rural demand, adversely affecting the current consumption-led industrial recovery. The consumer goods segment registered strong growth of 5.7 per cent in 1999/2000, up from 2.4 per cent in the previous year.

The poor performance of the capital goods segment was another worrying sign, analysts said. "The worrying point is the sluggish growth in the capital goods sector where very little investment is seen," said Srivastava. The capital goods segment registered 4.8 per cent growth in the fiscal year, sharply down from 11.8 per cent in 1998/99.

Consumer durables posted a growth rate of 12.2 per cent during the last financial year as against 4.7 per cent in 1998-99. The sector during March grew at 6.7 per cent. The consumer non-durables goods sector during 1999-2000 showed a growth rate of four per cent as against a meagre 1.8 per cent growth in 1998-99, the estimates said.

It said that the sector during March, grew by an impressive 6.5 per cent compared to only 1.7 per cent during the corresponding period 1999. While the intermediate goods sector posted a double-digit growth of 15 per cent during April-March 1999-2000 compared to only 5.9 per cent in the same period last year, the sector during March this year, grew by 19 per cent compared to 7.5 per cent in the same period last year.

It said in use-based category, the consumer non-durables sector grew by four per cent in April-March 1999-2000, as against 1.8 per cent in the same period last year.

Farm output not hit: CMIE

MUMBAI:The serious water and fodder crisis affecting Gujarat, Rajasthan and parts of Andhra Pradesh is not expected to significantly alter estimates of agricultural output during 1999-00 (July-June) as harvesting of most crops has been completed.

The Economic Survey of 1999-2000 placed the year’s foodgrain production at below 200 million tonnes as compared with 203 million tonnes in the previous year. Since, harvesting of most crops has been completed, much of the shortfall in output due to deficient rains has already been factored in, the Centre for Monitoring Indian Economy (CMIE) has said.

Wheat production during 1999-00 (July-June) was not expected to suffer any new impact due to the scarcity of water in some states of the country, it said. Similarly, a severe heat wave affecting Gujarat, Punjab, Rajasthan, Haryana and Orissa was not expected to harm the crops production, it said.

The overall wheat production is expected to be 70.1 million tonnes in 1999-00 as compared to 70.8 million tonnes in the previous year, it said.CMIE has also quoted the Union Ministry for Agriculture’s estimates released in March 2000, reflecting a 0.4 per cent decline in foodgrain production of 1999.