New Delhi: Despite hopes that industrial slowdown may have bottomed, the September IIP number slipped to a negative 0.4 per cent, disappointing the market that immediately slipped into the red. The street had been expecting a positive number of over 3 per cent based on core sector growth. However, Capital goods played truant falling to a negative 12.5 per cent from a negative 6 per cent in the year-ago period. In real terms, the September IIP decline wiped out all gains made in the previous two months. Meanwhile, August IIP too was revised downwards from 2.7 per cent (prov) from 2.3 per cent.
Speaking to CNBC-TV18, C. Rangarajan, advisor to PMEAC said the September IIP number it was a disappointing figure, particularly when the August industrial production rate showed a pick-up. He said the government had initially estimated FY13 GDP growth rate at over 6.5 per cent and later scaled it down to 6 per cent. "But now it can be in the region of 5.5 per cent," the advisor to the prime minister said, sounding cautious. He hoped inflation will decline December onwards.
There is a possibility that this month's IIP number is an aberration and may look better in the coming months. But still there is little scope of a significant improvement in the months ahead. Looking at all parameters — auto numbers, export numbers, and core sector growth — it appears that the Reserve Bank has very little room to cut rates in its subsequent policy meets.
Below is the growth recorded in key sectors
- Mining sector growth at 5.5 per cent Vs -7.5 per cent (YoY)
- Electricity sector growth at 3.9 per cent Vs 9 per cent (YoY)
- Basic goods growth at 3.5 per cent Vs 5.3 per cent (YoY)
- Capital goods growth at -12.2 per cent Vs -6.5 per cent (YoY)
- Intermediate goods growth at 1.8 per cent Vs -1.4 per cent (YoY)
- Consumer goods growth at -0.3 per cent Vs 5.7 per cent (YoY)
- Consumer durables growth at -1.7 per cent Vs 8.9 per cent (YoY)
- Consumer non-durables growth at 1.1 per cent Vs 2.7 per cent (YoY)
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