Factory Output measured by Index of Industrial Production (IIP) grew by 4.1% in February 2012

Factory output measured by the Index of Industrial Production (IIP) grew by a mere 4.1 per cent in February on account of contraction in segments such as consumer durables and intermediate goods. The IIP, which gauges factory output recorded a 6.7 per cent growth in February 2011.

As per the IIP data, the growth in factory output during April-February 2011-12 stood at 3.5 per cent from 8.1 per cent from the April-February period of 2010-11. Consumer durables registered a decline of 6.7 per cent in February and consumer goods contracted by 0.2 per cent during February 2012. Intermediate goods also saw a contraction of 0.6 per cent.

The manufacturing sector, which constitutes more than 70 per cent of the index, grew only by 4 per cent in April-February 2011-12 as against 7.5 per cent in April-February period of 2010-11. Intermediate goods performed dismally in February 2012 contracting 0.6%, while consumer goods contracted marginally by 0.2% for the first month since June 2009 as consumer durables shrank for the second consecutive month.

Electricity generation however showed a robust growth of 8 per cent as against 6.8 per cent during the year-ago period. Mining grew by 2.1 per cent. Mining production grew at 2.1%, the first month of expansion in the last seven. In terms of industries, 18 out of the 22 groups in the manufacturing sector grew in February against the corresponding month of 2011. Growth in basic goods reached a seven-month high of 7.5%, while the volatile capital goods segment grew 10.6%, expanding for the first time in six months.

The Union government decided to set up a committee to tighten sources of data gathering following the admission by the Ministry of Statistics and Programme Implementation that during the compilation of IIP for January, 2012, the sugar production was wrongly taken as 134.08 lakh tonnes in place of actual figure of 58.09 lakh tonnes. The discovery of the error forced a sharp downward revision in January’s growth rate from 6.8 per cent to just 1.1 per cent. Back in December 2011, the Commerce Ministry had admitted that exports were overstated by a whopping $9 billion during April-October 2011-12.