New Delhi: In what could be construed as the beginning of a slow down, the year 2008 has began on an ominous note with the industrial growth dipping to 5.3 per cent in January, less than half of what was recorded in the same month last year.
Industrial growth, as measured by Index of Industrial Production (IIP) slipped mainly on account of poor showing by all sectors of the industry, including manufacturing, electricity and mining, coupled with negative growth in consumer durables output.
Industrial growth slipped to 5.3 per cent in January as compared to 11.6 per cent in the same month last year. The growth in the capital goods sector slipped to 2.1 per cent as compared to 16.3 per cent in the same month last year. Consumer durables production dipped by 3.1 per cent as against a growth of 5.3 per cent last year. In fact, consumer durables production registered a negative growth both in January and the first 10 months of this fiscal.
The slump in industrial growth would force the Reserve Bank (RBI) to cut interest rates during 2008-09 even if it decides to maintain status quo in its annual monetary policy, to be unveiled in April, because of its concerns on inflation, said HDFC Bank Chief Economist Abheek Barua.
The decline in industrial growth, Barua said, "confirms apprehensions of a slow down in economy. The growth in 2008-09 will be close to 8 per cent rather than 8.5-9 per cent."
The economy is projected to grow by 8.7 per cent in the current fiscal, as per the advance estimates of the Central Statistical Organisation.
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