Industrial growth nosedives to 1.6 pc in Dec

New Delhi: Industrial growth slowed even further to a dismal 1.6 per cent in December, 2010, from 18 per cent in the same period a year ago due to the poor performance of the manufacturing sector. In November, 2010, the Index of Industrial Production (IIP) had expanded by a meagre 2.7 per cent.

Industrial growth during April-December this fiscal stood at 8.6 per cent, unchanged in comparison to the corresponding period of the previous year, official data released here today showed.

In December, 2010, manufacturing growth plummeted to 1 per cent from 19.6 per cent a year ago.

Consumer non-durables production declined by 1.1 per cent during the month under review, in sharp contrast to 3 per cent growth in the same period a year ago.

The capital goods sector also contracted by 13.7 per cent in December, 2010. The sector had expanded by 42.9 per cent in the corresponding period of the previous year.

Besides manufacturing, mining growth also fell to 3.8 per cent in the month under review from 11.1 per cent in the same period of the previous year. However, electricity generation expanded by 6 per cent in December, 2010, compared to 5.4 per cent in December, 2009.

In terms of industries, 12 out of 17 industry groups achieved positive growth in the last month of 2010.

While expressing disappointment at the low 1.6 per cent industrial output growth during December, Finance Minister Pranab Mukherjee on Friday said monthly numbers do not reflect correct picture of the economy.

"IIP numbers are very unfortunate and it is disappointing but it was on expected lines as it was on yearly basis," Mukherjee said in New Delhi.

"Monthly and weekly numbers do not reflect correct picture. Therefore you shall have to take the whole year into account. Let us see how it reflects in the annual picture," the Finance Minister added.

Sticking to its projection of over 8.5 per cent GDP growth this fiscal, the Planning Commission also said monthly variations in industrial output numbers should not be a cause of concern.

"Month-to-month variation in IIP should not occupy us too much," Planning Commission Deputy Chairman Montek Singh Ahluwalia said on the sidelines of an Indo-US Economic summit in New Delhi.

He said, "This high frequency IIP data is not necessarily an indication of an underlying trend."