With manufacturing contracting for the second month in a row in December—it has contracted for 5 out of the year’s 9 months to December—even a more than doubling of electricity growth over November couldn’t save the IIP, and this contracted 0.6% in December. And that’s on top of a 0.8% contraction the previous month. This means, in the first 9 months of FY13, IIP has grown just 0.7% or less than a fifth the 3.7% in the same period last year. Though it is incorrect to compare data for manufacturing in the IIP series with data for manufacturing in the advance GDP estimates put out last week—IIP measures production while GDP measures value-addition—the collapse of the IIP series suggests meeting even the 5% GDP target the CSO has estimated is likely to be at risk unless there is a sharp pick up in growth over January to March. This could, of course, happen since January 2012 had a lower manufacturing growth than December 2011 and March 2012 actually saw a negative growth—that means in 2 of the next 3 months, chances of the IIP growing faster are good.
No meaningful growth, however, can take place unless there is a massive jump in the number of projects cleared through the Cabinet Committee on Investments (CCI) process. The value of stalled projects in the first 9 months of FY13 was up to R8 lakh crore, up around 3 times since FY10; the number of new projects announced are down to lows last seen