Finance HomeNational
Industrial growth plunges, but there’s no worry
Tuesday, May 13, 2008 10:59 [IST]

G Seetharaman

Mumbai: India’s industrial production number for March presented a picture of collapse on Monday: It grew 3%, the slowest since 2002, compared with 8.6% in February.

Is the country facing a serious slowdown?

No way, say economists.

Indranil Pan, chief economist at Kotak Mahindra Bank, has a suggestion: don’t take the IIP index number, which measures India’s industrial activity, seriously.

“The primary reason for the drop is the high base effect last year. I foresee the IIP growing at an average of 7-8% this fiscal,” he said.

High-base effect is a statistical occurrence where, because of extremely high growth last year, the current year’s growth looks low.

For example, in March 2007, the IIP growth rate was a stupendous 14.8%. But the current growth rate of 3% is over that high number.

It’s difficult for a country to grow, say, 10-12% over 14.8%, because chances of the economy going into an inflationary boil, or “overheating”, are very high.

The reaction of Abheek Barua, chief economist at HDFC Bank, is more extreme: He questions the validity of the numbers.

“Looking at manufacturing, of textile machinery and corporate growth in general, it is not possible there has been a drop in IIP growth.” He estimates the IIP growth for March to be actually around 7-8%.

Shuchita Mehta, senior economist at Standard Chartered Bank, said there has been a deceleration in economic activity in the past four months. She foresees ‘a moderate IIP growth’ in the coming months.

With inputs from agencies


Source : DNA

 Post Your Feedback   
Name
Email ID
Comments
 Other Features
News today
Press Releases
Stock Research
Market Tools
Print this page
Mail this page
Archives

  
More Finance News
US stock show up in green
Gold prices at all time high
Manufacturing sector recuperating...
Nokia to bid for Nortel assets
BSE to alter its transaction fee
Intel pays $1.25 bn to settle a...
Firefox celebrates five years
Google to buy AdMob for $750 mn
New norms of SEBI
Worst is over- Mahindra Satyam
Wanna know corporate secrets?
A doller story through doller's...
Indian trader bamboozles Aussie...
Indian economy will expand by March...
Now, what happned Sirjee?
India to wind-down fiscal stimulus:...
US,China joining hands: beware...
Nano used-car premiums fizzling out
RBI buys 200 metric tonnes gold...
Park to replace Hyundai chief
Wills Lifestyle to tweak...

    WORTH A CLICK
  Sarees
Baby Clothes
Jewellery
Bluetooth Headsets
Health & Fitness