Industrial growth slips to six-yr low of 3%

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Monday , May 12, 2008 at 1735 hrs Sluggish performance of the manufacturing sector pulled down growth in industrial production to a six-year low of three per cent in March, compounding worries of the government and RBI that are trying to fight rising prices.

The numbers for March is lowest since the 2.4 per cent recorded in February 2002.

Owing to the slow growth in March, the industrial output, measured by the Index of Industrial Production (IIP), slipped to 8.1 per cent for 2007-08 from 11.6 per cent a year ago.

However, industrial growth figures for the entire fiscal was not as dismal as that of March, giving some solace to the government.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said: "There was an estimate of 8-8.5 per cent. The lower end of the range is acceptable".

Manufacturing output, which carries almost 80 per cent weight in IIP, rose by a poor 2.9 per cent in March against 16 per cent a year ago, as consumer durables output fell.

The slowdown in the industry could have a marginal effect on the overall growth of the economy, which is projected to grow by 8.7 per cent. This coupled with a 7.61 per cent inflation in the early part of current fiscal could impact demand, analysts say.