NCAER upbeat on industrial recovery

NEW DELHI: Painting a rosy picture for the industrial sector, NCAER has said the general index of industrial production was projected to rise to 6.36 per cent by the middle of 2003, even as it said the undercurrent of industrial recovery was not broadbased.
"IIP rose by four per cent in the first quarter of this fiscal over the corresponding period last year.The increase is the highest in the last five quarters. This vindicates the expectations of revival of industrial growth based on growth of tax collection, exports and business optimism observed in the first few months of the year," NCAER mid-year review said.
It said the overall optimism on the IIP was on account of better prospects in mining and quarrying with moderate recovery in manufacturing and electricity.
The IIP-mining and quarrying was expected to be 12.47 per cent by July 2003 as against 6.99 per cent in April-September 2002-03, while that of manufacturing was expected to go up to 5.73 per cent as against 3.81 per cent so far in this fiscal.
On the recovery undercurrent, it said, "when we examine the performance at a slightly disaggregate level, the revival of growth appears rather narrowly based."
In the use-based categories, the basic, capital and consumer goods had all shown a perceptible recovery. However, intermediate goods recorded a dip in the growth rate in the first quarter of the current fiscal, NCAER reasoned.
Infrastructure industries performed well in the first quarter this fiscal with output growth improving in each of the six infrastructure industries including crude oil production that turned positive to seven per cent from a decline.
Production of petroleum products also rose during the period by 5.4 per cent and coal, steel, cement and electricity sector registered output growth of over five per cent, NCAER said.
Even if the growth in manufacturing IIP at 3.8 per cent was lower than the overall IIP, mining sector which grew at 7 per cent lifted the overall IIP growth to four per cent.
NCAER said, "the latest data on industrial output indicates stronger growth in manufacturing with IIP for this sector increasing by 5.7 per cent in July."
Besides the industrial infrastructure sectors, evidence of improvement in industrial activity was also seen in the growth of revenue earning of railway freight traffic, it said.
"The goods traffic during the first quarter has shown a sharp increase of 5.4 per cent compared to only 0.4 per cent recorded during first quarter last year," it added.
NCAER also projected a turnaround in capital goods sector and said the first quarter growth in the current fiscal stood at 3.5 per cent.
A surge in the growth has also been seen in the consumer non-durables sector with growth rate of 9.2 per cent during the first quarter this fiscal.
Textiles products recorded a growth of 15.2 per cent in the first quarter of this fiscal and beverages industry saw a growth of over 17 per cent.
High growth of chemicals and basic metal industry also contributed to the growth of basic goods sector, NCAER said adding growth in machinery and transport equipment has brought about a turnaround in the production of the capital goods sector, which remained sluggish for the last two years, it said.