INDUSTRIAL PRODUCTION in India was highly sluggish in March 2008.The low performance of the manufacturing and production sector pulled down growth in industrial production to a six-year low of three per cent. This has been one of the basic reasons of rising production. Manufacturing sector carries almost 80 per cent weight in industrial production. The slowdown in the industry had a marginal effect on the overall growth of the economy. This growth coupled with inflation affects demand. It is said that the industrial slow down is basically due to high inflation rate, because input costs for manufacturing substantially increases, and higher fuel costs augments transportation costs.
The industrial slowdown also increases the dilemma of the Reserve Bank of India in choosing between anti-inflationary measures and growth-promotion steps. If money supply is tightened to a large extent, it retards the growth process. The deceleration was also witnessed in other categories like capital goods (8.6 per cent against 18.1 per cent, basic goods (3.1 per cent against 11.9 per cent) and intermediate goods (3.5 per cent against 15.3 per cent).
But, as we are out of the world-wide recession, industries now are in top gear. The manufacturing sector has bounced back with vigour, with a sharp surge in the number of sectors that show dizzy growth. While an increasing number of sectors are showing excellent growth, many sectors remain in moderate growth zone including some core sectors such as cement and steel.
During April-December 2010-11 the estimated data show that construction equipment, auto components, air conditioners, natural gas, tractors, nitrogenous fertilisers show excellent growth of 39.2 per cent, crude oil, power transmission towers, industrial gases, and utility vehicles show high-growth of 17.3 per cent, and cement, steel, caustic soda, rubber goods, and urea show moderate growth. Only eight sectors report negative growth this year as compared to 28 sectors last year.
In essence, as many as 50 to 127 sectors covered in a periodic survey by the Confederation of Indian Industry’s (CII) Council of Association have shown year-on-year growth of more than 20 in April-December period, compared with 27 last year. This indicates a strong rebound.
As a consequence, all this upswing, gross domestic products (GDP) growth may reach nine per cent starting Fiscal Year 2012.
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