Industrial production growth falls to 6 years low, sends alarm bells ringing

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Growth in industrial production during the year 2007-08 fell to 8.1 percent in 2007-08 from 11.6 percent in 2006-07, data released by Central Statistical Organization revealed.

Manufacturing production rose a dismal 2.9 percent in March from a year earlier, compared to 8.6 percent rise in February leading to the decline in industrial production during the year, analysts said. Production in manufacturing sector has a weight of 80 percent in the Index of Industrial Production (IIP).

The 3 percent rise in March is the smallest year-on-year increase since a 2.4 percent rise in Feb. 2002, they said.

During the fiscal year 2007-08, the manufacturing sector decelerated to 8.6 percent from 12.5 percent a year earlier.

While power sector witnessed a slowdown in growth during the period (6.4 percent from 7.2 percent a year earlier), the mining sector grew only by 5.0 percent, compared to 5.4 percent a year ago.

For the month (March 2008) under consideration, the power sector grew by 3.7 percent as against 7.9 percent in March 2007.

The growth in mining sector also witnessed a slump, declining to 3.8 percent in March 2008 as against 8 percent in the corresponding month a year earlier.

The dismal market data, coupled with inflation touching a 42 months high of 6.71 percent, the analysts feel, is going to make the government's fight against inflation harder.

However, as many as 12 out of the 17 industry groups, showed positive growth during March.

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