For economy, hope rises 2.4%
India’s industrial production grew by 2.4 per cent in January, leading some economists to predict that the economic slowdown may have bottomed out. This has come after the second consecutive month of positive growth in February.
The finance and industry ministries urged the Reserve Bank to give some further impetus to boost growth. Economic affairs secretary Arvind Mayaram said there was a case for giving “further impulses for growth”. Industrial production growth contracted 0.8 per cent in November and 0.5 per cent in December.
The manufacturing sector grew 2.7 per cent in January, against one per cent in the same month last year. The electricity sector grew 6.4 per cent, compared to 3.2 per cent in January 2012. But the mining sector contracted 2.9 per cent, reflecting that it still faces environmental, forest clearance-related and other regulatory issues. The capital goods segment contracted 1.8 per cent, while the consumer goods sector grew 2.8 per cent, with consumer durables contracting 0.9 per cent and consumer non-durables growing 5.3 per cent.
“The January IIP is an assertion that growth downturn has bottomed out. (But) this is not to indicate there will be a big bounce in growth as in the previous slowdown cycle immediately after Lehman,” said Indranil Pan, chief economist, Kotak Mahindra Bank. He said growth rebounded after the post-Lehman slowdown due to a significant boost from both the fiscal and monetary side, with some help from the global climate, including a fall in international crude oil prices. “The situation today is very different”, he added.
Ficci chief Naina Lal Kidwai said growth in industrial and manufacturing sectors was an area of concern as positive growth of 2.4 per cent in January 2013 comes over a low base. “Any sustained growth remains elusive in the immediate future,” she added.
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