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India’s industrial output slows down in tandem with global meltdown

India’s industrial output has slowed down since June 2011. The government said there has been a moderation in the growth of industrial production as shown in the table below:

                                                                                                   India’s Industrial Output    (in percent)

Sectors Weights June July Aug Sep
Mining

14.157

-1.4

1.5

-4.1

-5.6

Manufacturing

75.527

11.2

3.2

4.0

2.1

Electricity

10.316

7.9

13.1

9.5

9.0

Overall IIP

100

9.5

3.8

3.6

1.9

The  government has attributed the moderation in industrial growth, to the falling rate of growth of consumption expenditure, under performance of the construction sector, hardening of interest rates resulting in increase in the cost of capital and global economic uncertainty.
However, it is not possible to assess as to what extent each of these factors have individually contributed to a moderation in industrial growth.

The government said it has taken initiatives to revive the industrial climate and growth which includes promotion and facilitation industrial investment including foreign direct investment, improvement in business environment, development of industrial and other infrastructure through public-private initiatives, development of industry relevant  skills etc.

In November, the new National Manufacturing Policy which aims at bringing down compliance burden of industry through self regulation and help industry to become globally competitive was unveiled, the government said.    The ultimate objective of the policy is for enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs, said Jyotiraditya Scindia,  India’s junior minister for Commerce and Industry in written reply to a question in the Rajya  Sabha on Wednesday.

Slow-Down in Industrial Production Growth:

The minister stated that the Index of Industrial Production (IIP) also has shown a moderation in the growth in August as compared to the corresponding month of the previous year, as given in the table below:-

 

  August-2010 August-2011
Basic Goods 3.8 5.2
Capital Goods 4.7 4.0
Intermediate Goods 5.8 1.9
Consumer Goods 4.6 2.2
Overall Index 4.5 3.6

 

He assured that various steps have been taken by the government to boost industrial production which, inter-alia include promotion and facilitation of industrial investment including foreign direct investment, improvement in business environment, development of industrial and other infrastructure through public-private initiatives and development of industry relevant skills.

He hoped that the National Manufacturing Policy, which aims at bringing down compliance burden of industry through self-regulation, will help the Indian industry to become globally competitive.

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