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

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

The industry group 'Jute and Other Vegetable Fiber Textile (except cotton)' posted the highest growth of 62.7 percent, followed by 'Other Manufacturing Industries' group which posted 24.9 percent.

Third highest growth was posted by 'Leather and Leather & Fur Products' group at 12.7 percent.

However, the 'Metal Products and Parts, except Machinery and Equipment' group posted a negative growth of 25.8 percent, followed by a 5.8 percent decline in growth posted by 'Furniture & Fixtures' group.

The 'Textile Products (including Wearing Apparel)' group posted a 5.5 percent decline in growth.

While the growth of the basic goods slipped to 3.1 percent in March from 11.9 percent in the corresponding period a year ago, the growth of intermediate goods slowed down to 3.5 percent from 15.3 percent for the corresponding period a year earlier.

The consumer goods sector also showed a growth slowdown, declining to 0.1 percent in March compared to 15.8 percent for the corresponding period a year ago.

While the consumer durables sector witnessed a negative growth rate of 2.1 percent, compared to a positive growth of 3.8 percent in March 2007, non-durables growth considerably slowed down to 0.6 percent from 20.2 percent for the same month a year-ago.

The Reserve Bank of India (RBI) has already tightened cash conditions for the second time in less than a month, by raising its cash reserve ratio (CRR) by 25 basis points (0.25 percent) to 8.25 percent with effect from May 24 while keeping other official rates intact.

In a bid to drain out excess liquidity from the market, the RBI had already announced a hike in the CRR, or the proportion of reserves the banks must keep with the central bank, on April 17, raising the ratio to 8 percent in two stages of 25 basis points each.

The first increase has already taken place and the second became effective on May 10.

• 1
• 2
• 3