INDUSTRIAL PERFORMANCE
Industrial Performance During 2009-10 After a deep global recession, economic growth has turned positive and the global economic outlook has improved over the past few months.Indian economy grew at an average rate of 8.8 per cent in the four-year period from 2005-06 to 2008-09, despite the crisis-affected year of 2008-09. The economy weathered the financial turbulence well and grew at 7.2 per cent in 2009-10. The rapid adjustments in the monetary and fiscal policies were well calibrated and desired results achieved.
Sectoral Performance
All the three sectors namely mining, manufacturing and electricity have shown positive growth during 2009-10 (April 2009-March 2010). The mining and quarrying registered a growth rate of 9.7 per cent during 2009-10 (April 2009-March 2010), as against the growth rate of 8.3 per cent during (April-November 2009). Due to this increase in the IIP-Mining, the growth rate in GDP is now estimated at 10.6 per cent, as against the advance estimate growth rate of 8.7 per cent.
Similarly, the IIP of manufacturing registered a growth rate of 10.9 per cent during 2009-10 (April 2009-March 2010) as against the growth rate of 7.7 per cent during (April-November 2009). Due to this increase in the IIP, the GDP of manufacturing sector is now estimated at 10.8 per cent, as against the Advance estimate growth rate of 8.9 per cent.
The sectors which showed growth rates of 5 per cent or more, are ‘mining and quarrying’ (10.6 per cent), manufacturing (10.8 per cent), electricity, gas and water supply (6.5 per cent) construction (6.5 per cent), trade, hotels, transport and communication (9.3 per cent), financing, insurance, real estate and business services (9.7 per cent),and community,social and personal services (5.6 per cent). The agriculture, forestry and fishing sector, however registered a growth rate of 0.2 per cent.
Similarly, the IIP of manufacturing registered a growth rate of 10.9 per cent during 2009-10 (April 2009-March 2010) as against the growth rate of 7.7 per cent during (April-November 2009). Due to this increase in the IIP, the GDP of manufacturing sector is now estimated at 10.8 per cent, as against the Advance estimate growth rate of 8.9 per cent.
The sectors which showed growth rates of 5 per cent or more, are ‘mining and quarrying’ (10.6 per cent), manufacturing (10.8 per cent), electricity, gas and water supply (6.5 per cent) construction (6.5 per cent), trade, hotels, transport and communication (9.3 per cent), financing, insurance, real estate and business services (9.7 per cent),and community,social and personal services (5.6 per cent). The agriculture, forestry and fishing sector, however registered a growth rate of 0.2 per cent.
Comparative growth rates for these three sectors for the year 2007-08 to 2009-10 (April 2009-Mar 2010) are given in table below:
| Annual Growth rate of industrial production in major sectors of industry (Based on the Index of Industrial Production) Base: 1993-94=100 (Per cent) | ||||
| Period | Mining & Quarrying | Manufacturing | Electricity | Overall |
| Weight | 10.47 | 79.36 | 10.17 | 100.00 |
| 2007-08 | 5.1 | 9.0 | 6.4 | 8.5 |
| 2008-09 | 2.6 | 2.8 | 2.8 | 2.8 |
| 2009-10 (Apr 2009-Mar 2010) | 9.7 | 10.9 | 6.0 | 10.4 |
Source: Central Statistical Organisation (CSO)
Use-Based Classification
In terms of the use-based classification, the IIP growth in March 2010 was driven by high growth in capital goods and consumer durables, while basic and intermediate goods displayed healthy growth in excess of 10%, suggesting that the demand for finished products remains strong. The pace of growth of consumer durables improved to 32% in March 2010 from 30% in February 2010, suggesting that consumer confidence and demand remains robust.
Capital goods expanded by a robust 27.4% in March 2010. The capital goods sub-index remained the highest contributor to IIP growth amongst the use-based industries for the fourth consecutive month. While the high growth in this category is likely to have been supported by infrastructure spending by the Central and State Governments at the end of the fiscal year, the steep increase in Bank credit off-take and external commercial borrowings in March 2010 suggest a revival of private investment. Investment sentiment and the trends in private investment growth are likely to considerably influence the pace of IIP growth in the coming months.Cumulative growth for capital goods during April 2009-March 2010 was expanded by 19.2 percent as compared 7.3 percent during same period of 2008-09.
The growth of intermediate goods remained healthy at 12.7% in March 2010. Continued double-digit growth suggests that the demand for finished products remains robust.The growth rate of intermediate goods is expected to moderate in the coming months with the waning of the favourable base effect.Cumulative growth for intermediate goods during April 2009-March 2010 was expanded by whopping 13.6 percent as compared to -1.9 percent during same period of 2008-09.
Basic goods expanded by 10.1% in March 2010.The sub-index displayed a growth of 7.1 percent in April 2009-March 2010,considerably higher than 2.6 percent during same period of 2008-09.
Basic goods expanded by 10.1% in March 2010.The sub-index displayed a growth of 7.1 percent in April 2009-March 2010,considerably higher than 2.6 percent during same period of 2008-09.
The overall growth in consumer goods improved to 10.6 percent as compared to 1.3 percent during same month of 2008-09.The cumulative growth of consumer goods during April 2009-March 2010 expanded by 7.4 percent as compared to 4.7 percent during same period last year.
The pace of growth of consumer durables improved to 32% in March 2010 from 30% in February 2010, suggesting that domestic consumer demand remains robust. The high growth displayed by consumer durables in March 2010 is noteworthy, coming on the back of 8.4% growth in March 2009. This use-based category displayed the highest average growth rate during April 2009-March 2010 at 26.1%, relative to the low growth of 4.5% during same period of 2008-09, reflecting robust domestic consumer confidence and demand, benefiting substantially from the release of Pay Commission related arrears to Government employees as well as the recent revival in exports. Notwithstanding the positive impact of the staggered release of Pay Commission related benefits to State Government employees on demand for consumer durables, the growth of this sector is expected to moderate substantially in the coming months led by an adverse base effect following the double-digit growth displayed by consumer durables throughout 2009-10. Additionally, the transmission of monetary tightening into higher interest rates may depress consumer demand to some extent.
Consumer non-durables expanded by 3.3% in March 2010, resulting in a low 1.5 % average growth for the period April 2009-March 2010 as compared to 4.8 percent during same period of 2008-09.This was the only category displaying lower growth in 2009-10 relative to 2008-09. In the near term, the level of the agricultural output and its impact on inflation would influence the disposable incomes and purchasing power of both rural and urban households, which remains a critical determinant of the demand for consumer non-durables.
The pace of growth of consumer durables improved to 32% in March 2010 from 30% in February 2010, suggesting that domestic consumer demand remains robust. The high growth displayed by consumer durables in March 2010 is noteworthy, coming on the back of 8.4% growth in March 2009. This use-based category displayed the highest average growth rate during April 2009-March 2010 at 26.1%, relative to the low growth of 4.5% during same period of 2008-09, reflecting robust domestic consumer confidence and demand, benefiting substantially from the release of Pay Commission related arrears to Government employees as well as the recent revival in exports. Notwithstanding the positive impact of the staggered release of Pay Commission related benefits to State Government employees on demand for consumer durables, the growth of this sector is expected to moderate substantially in the coming months led by an adverse base effect following the double-digit growth displayed by consumer durables throughout 2009-10. Additionally, the transmission of monetary tightening into higher interest rates may depress consumer demand to some extent.
Consumer non-durables expanded by 3.3% in March 2010, resulting in a low 1.5 % average growth for the period April 2009-March 2010 as compared to 4.8 percent during same period of 2008-09.This was the only category displaying lower growth in 2009-10 relative to 2008-09. In the near term, the level of the agricultural output and its impact on inflation would influence the disposable incomes and purchasing power of both rural and urban households, which remains a critical determinant of the demand for consumer non-durables.
Comparative growth rates of industrial production based on use-based classification since 2007-08 to 2009-10 (April-March 2010) are given in table below:
| Sectors | Weight | 2007-08 | 2008-09 | 2009-10 (March 2010) | 2009-10 (Apr 2009-Mar 2010) |
| Basic Goods | 35.6 | 7.0 | 2.6 | 10.1 | 7.1 |
| Capital Goods | 9.3 | 18.0 | 7.3 | 27.4 | 19.2 |
| Intermediate Goods | 26.5 | 9.0 | -1.9 | 12.7 | 13.6 |
| Consumer Goods | 28.7 | 6.1 | 4.7 | 10.6 | 7.4 |
| (i) Consumer durables | 5.4 | -1.0 | 4.5 | 32 | 26.1 |
| (ii) Consumer non durables | 23.3 | 8.6 | 4.8 | 3.3 | 1.5 |
Source: Central Statistical Organisation (CSO)
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