Is Indian economy is going down now? This was a million-dollar question that raised when market experts saw the negative growth patterns in industrial output report released on Monday. According to the report, six important industries in the infrastructure space have registered a 0.6% growth in month of September this year while it was 10.6% in the same period in 2006.
The report said further that the growth for the April-September period of this fiscal was 6.6% while it was 8.7% in the same period in 2006. The six core infrastructure industries contribute at least 26.7% to the Index of Industrial Production (IIP). The crude petroleum production was the worst performer by showing negative growth of 0.7% in September. It was 9.4% in the same month last year. The growth in the petroleum refinery sector also has gone down with 6.9%, against almost 13% in the same period last year.
The similar story has been repeated in the power sector with electricity generation growing faced a sluggish 4.3% growth while it was 11.5% in September last year. The cement sector has also seen decline in growth with 5% growth as compared to a 16.5% last year. However, the coal sector is the only sector among the key industries that has showed a positive growth from ‘ve 0.8% to a 6.2% growth this September. The steel sector has maintained the double-digit growth of more than 10% in September.
Earlier, another report had said that the negative rate of industrial growth in India was the result of higher interest rates and a rising value of Indian rupees against the US dollar in international market. The government data said that India’s industrial growth slowed to 6.4 percent in September while it was 10.7 percent in August 2007 and 12% in September 2006. The growth has been reduced by almost half if we compare with the industrial growth in September 2006.
The market experts have said that the five-times interest rate increase from mid-2006 to March 2007 and almost 12% increase in the value of Indian currency have hurt the broader economy. Are the soaring global crude prices, rising value of Indian currency hurting the Industrial growth in the country?
DK Joshi at Crisil in Mumbai has said that if it happened again in the month of October it would be a matter of serious concern for Indian economy. However, the market experts have said that the industrial growth numbers are provisional data and are often revised significantly and Indian Finance minister was still hopeful to touch 9% GDP growth in this financial year.