Mining downs IIP to 7.4% in August

A massive 5.7 per cent drop in the growth rate of the mining sector, coupled with a close to 1 per cent drop in manufacturing growth, in Aug...

A massive 5.7 per cent drop in the growth rate of the mining sector, coupled with a close to 1 per cent drop in manufacturing growth, in August 2005 has pulled down the overall index of industrial production (IIP) from 8.6 per cent in August 2004 to 7.4 per cent during August 2005.

According to the quick estimates of IIP released on Monday, the growth rate for mining during August 2005 stood at (-) 1.3 per cent as compared to growth of 4.4 per cent during the same period last year. Incidentally, the mining sector has also shown a decline in growth for April-August 2005-06 (2 per cent) compared to last year’s quarter (5.2 per cent).

This disturbing trend in mining was also seen in the GDP figures released last month, where mining was the only sector that showed lower growth rates during the first quarter of this year.

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Manufacturing grew by a healthy 8.2 per cent in August, but this was still lower than the 9.1 per cent growth registered during the corresponding period last year. However, manufacturing has shown an increase in growth rate from 8.4 per cent to 9.8 per cent for April-August 2005-06.

As manufacturing has the highest weightage in the IIP, the overall growth for this period (April-August) increased from 8 per cent to 8.8 per cent.

Another key component of IIP, electricity, shows an increase in growth during the month of August, but shows a decline for April-August as a whole. In August 2005-06, the growth rate of electricity stood at 7.8 per cent as compared to a growth rate of 7.4 per cent in August last year. However for the five-month period, the growth rate in 2005-06 dipped to 5.9 per cent as compared to a growth of 7.7 per cent in 2004-05.

Interestingly, apart from basic goods, the growth rate of all other segments have gone down during August 2005.

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While growth in basic goods was 8.4 per cent in August 2005 as against 5.2 per cent a year ago, capital goods recorded 8.9 per cent growth as compared to 13.5 per cent a year ago. In the case of intermediate goods, growth slipped to 2.5 per cent as against a growth of 4.9 per cent in August last year.

Growth rates for consumer goods stood at 10.6 per cent in August 2005 as against 14.4 per cent in August 2004. Consumer durables and non-durables grew by 13.1 per cent and 9.7 per cent in August 2005 as against 20.1 per cent and 12.4 per cent respectively in August 2004-05.