8/3/2019 Index of Industrial Production October 12th 2011

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ealth Research, Unicon Financial Intermediaries. Pvt. Ltd.

mail: wealthresearch@uniconindia.in

October 12th, 2011

Index of Industrial Production (IIP)

The slower growth of industrial production continues

Higher inflationary pressures and slower activity in the manufacturing & mining sectors have resulted in slower

growth of industrial production. India's industrial production growth slowed to 4.04% (consensuses estimates of

4%) in August 2011, from 4.5% in August 2010, however it increased from 3.84% growth recorded in July 2011.

The Manufacturing sector which has largest weightage (~79%) in the IIP grew by 4.48% in August 2011 from 3.1%

in July 2011. The mining ban in Karnataka comprising ~33% of the Indian mining (iron-ore) output, led to a

negative growth of 3.3% in August 2011 (weightage of 10.4%) from (41%) in July 2011. Also, electricity sector

(weightage of 10.1%) declined by 9.4% in August 2011 from 13% in July 2011.

As per Use-based classification, the growth rates in August 2011 are 5.4% in Basic goods, 3.9% in Capital goods

and 1.3% in Intermediate goods YoY. The Consumer durables and Consumer non-durables have recorded growth

of 4.6% and 2.9% respectively, with the overall growth in Consumer goods being 3.7%. Some of the important

items of intermediate goods showing negative growth during the current month and thus contributing to the low

growth of the overall index for the month include Colour TV Picture Tubes (-59.8%), Viscose staple fibre (-40.9%),

Sealed Compressors (-38.7%) and twine, jute (-36%). However, some important items of the intermediate goods

showing significant positive growth are Petroleum Coke (287.4%), Furnace Oil (38.9%) and Industrial Alcohol

(36.6%).

In terms of industries, 11 out of the 22 industry groups in the manufacturing sector have shown positive growth

during the month of August 2011 are TV and communication equipment & apparatus has shown the highest

growth of 12.5%, followed by 12.1% in Other transport equipment and 11.6% in Fabricated metal products, except

machinery & equipment. On the other hand, the industry group Office, accounting & computing machinery has

shown a negative growth of 26.8% followed by 20.5% in Tobacco products.

Conclusion

With IIP slowing down considerably & high inflation numbers, the Reserve Bank of India would be facing a

dilemma in the ensuing policy review. The food & fuel inflation remained above the RBI threshold limit showing

the government's inability to control price rises through monetary policy. High inflation is pressurising the

consumer demand & slower growth in investment activities (lower growth of FDI) is likely to affect the economic

growth of the country. The slower activity in the industrial production is likely to pressures the credit growth of

the banks going ahead.

8/3/2019 Index of Industrial Production October 12th 2011

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ealth Research, Unicon Financial Intermediaries. Pvt. Ltd.

mail: wealthresearch@uniconindia.in

October 12th, 2011

Address:

Wealth ManagementUnicon Financial Intermediaries. Pvt. Ltd.

VILCO Center, Near Garware House,

8, Subhash Road, Vile Parle (East),

Mumbai-400057Ph: 022-3390 1469Email: wealthresearch@unicon.inVisit us at www.unicon.in

Index of Industrial Production

Particulars (% YoY) Weight Aug-11 Jul-11

Sectoral classification

Mining 10.47 (3.37) (41.35)Manufacturing 79.36 4.48 3.14

Electricity 10.17 9.45 13.09

General 100.00 4.04 3.84

Use-based classification

Basic Goods 35.57 3.90 9.51

Capital Goods 9.26 3.90 (13.75)

Intermediate Goods 26.51 1.32 (0.55)

Consumer Goods 28.66 3.67 7.71

Consumer durables 5.36 4.55 9.02

Consumer non-durables 23.30 2.82 6.55

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