IIP growth shrinks to 1.9 per cent

15 November 2011: ICRA has come out with its report on Index of Industrial Production (IIP) for September 2011. As per the research firm IIP growth slows to 1.9 per cent led by contraction in capital goods and consumer non-durables. The Index of Industrial Production (IIP) recorded a low 1.9 per cent growth in September 2011, relative to the 6.1per cent growth recorded in September 2010, marking the slowest pace of IIP growth since September 2009. The sluggish IIP growth in September 2011 reflected a contraction of capital goods (6.8per cent) and consumer non-durables (1.3per cent) as well as a low 1.5per cent growth of intermediate goods, highlighting continuing weakness in both investment and consumption growth. Basic goods displayed a modest 4.5 per cent expansion in September 2011, benefiting from a healthy growth of electricity (9.0per cent), which accounts for over 22 per cent of the basic goods sub-index. In contrast to the weakness displayed by consumer non-durables and intermediate goods, consumer durables displayed an expansion of 8.7per cent in September 2011, which may represent a building up of inventory prior to the festive season.

IIP growth weakened for the third consecutive month in September 2011 (to 1.9 per cent, from 9.5per cent in June 2011, 3.8per cent in July 2011 and 3.6per cent in August 2011). The growth performance weakened in year-on-year (y-o-y) terms in September 2011 as compared to August 2011 in the case of basic goods (to 4.5per cent from 5.2per cent), intermediate goods (to 1.5per cent from 1.9per cent), capital goods (to a de-growth of 6.8per cent from an expansion of 4.0per cent) and consumer non-durables (to a de-growth of 1.3per cent from a de-growth of 0.5per cent). However, the pace of growth of consumer durables improved to 8.7per cent in September 2011 from 5.5per cent in August 2011.

Source: Moneycontrol online