NEW DELHI: After a gap of 15 years, the country’s industrial growth has slipped into negative territory with a 0.4 per cent year-on-year decline in October 2008.
This clearly reflects the deepening impact of the global economic downturn. Such a grim scenario prevailed in April 1993.
The figure, contained in the Index of Industrial Production (IIP) data released on Friday, marks a sharp slump from the robust 12.2 per cent growth recorded in October last year. In September 2008, it was 5.45 per cent.
With over 12 per cent drop in exports in October, a deceleration in industrial growth during the month was expected. But what took the policymakers by surprise was the bigger than expected decline. “These figures are more disappointing than what we expected,” Prime Minister’s Economic Advisory Council chairman Suresh Tendulkar said.
The authorities, however, are optimistic that the December 7 economic stimulus package that included a 4 percentage point across-the-board reduction in excise duty would arrest any further decline in production and trigger fresh consumer demand at lower prices.
Despite the slump in industrial production, the Indian economy, unlike some others in the West, is nowhere near recession as the industries captured in the IIP constitute just about a third of the GDP (gross domestic product) basket and the major chunk is accounted for by the agriculture and services sectors.
The IIP data shows that manufacturing — comprising nearly 80 per cent of the index — posted a negative growth of 1.2 per cent in October, compared to the 13.8 per cent output increase in the same month a year ago.
Moreover, the production growth in two out of the four segments that make up the manufacturing index — intermediate and consumer goods — shrank to minus 3.7 per cent and minus 2.3 per cent from a robust growth of 13.9 and 13.7 per cent respectively.
Even within the consumer goods segment, consumer durables and non-durables posted negative growth rates of minus 3 and minus 2 per cent respectively.