Press Information Bureau
Government of India
Ministry of Commerce & Industry

13-August-2012 17:20 IST

Industrial Production

   The growth rate of Index of Industrial Production (IIP) has moderated from 7.0 percent in first quarter (April-June) of 2011-12 to -0.1 percent in April-June Quarter of the current year i.e. 2012-13.

  

            The IIP growth, sector-wise and month-wise, for the quarter April- June for the years 2011-12 and 2012-13 is given in Table -1at Annexure-I. The Sectors that have adversely affected IIP growth are manufacturing and mining. Major reasons for the decline in manufacturing include global economic uncertainty, sluggish domestic demand, hardening of interest rates etc., whereas regulatory and environmental issues, court orders, decline in international demand for metallic minerals etc. are affecting production in the mining sector. As such the slowdown in these sectors is likely to have a moderating impact on the Gross Domestic Product (GDP).

            Details of Industrial Growth during last three years, sector wise, and core sector-wise are  given in the Table-2 and in the Table-3 respectively at Annexure-I.

            While one to one correlation cannot be established between losses in Industrial sector and depreciation of rupee or inflation or recent slowdown in European countries, all these factors have a bearing on the industrial growth of the country.  Depreciation of rupee is likely to increase cost of production of those industries which depend on imported raw materials, capital goods etc.; inflationary pressure is likely to increase manufacturing cost and also reduce domestic demand; and the slowdown in European countries can have an adverse impact on exports.

Government has already taken confidence building measures for improving the industrial climate and manufacturing in the country. Government had approved the National Manufacturing Policy (NMP) in October, 2011 with the objectives of enhancing the share of manufacturing in GDP to 25% by 2022 and creating additional 100 million jobs. One of the instruments in the NMP is the creation of National Investment and Manufacturing Zones (NIMZ) as planned integrated industrial townships. Nine NIMZs have been announced, eight of which are along the Delhi Mumbai Industrial Corridor (DMIC). Other measures include the promotion and facilitation of industrial investment including promotion of foreign direct investment through consolidation of press notes into a single document; development of industry relevant skills; regular meetings with industry associations and stakeholders to fast track implementation of industrial projects.

In order step up production of oil and gas, Government is encouraging participation of private sector, including foreign companies, for exploration and production of petroleum and natural gas and related activities that are capital intensive and requiring use of expensive state-of-art technology. 

In order to increase the production of Metallic Minerals (Iron ore, manganese, chromites), the Government has sought to  create an attractive environment for investment by legislative reforms in the form of Mines & Minerals (Development and Regulation) Bill, 2011 introduced in Parliament in December, 2011, quarterly review of pending cases of Environment and Forest clearances etc.

  The World Economic Outlook Update , July 16^th 2012 of the  International Monetary Fund (IMF) has moderated India’s growth rate for 2012 from 6.4 per cent (estimated in April, 2012) to 6.1 per cent (as estimated in July, 2012) on the ground of weaker external environment, deceleration of domestic demand, capacity constraints and policy tightening.

    Index of Industrial Production (IIP) for a particular month is released by Central Statistics Office (CSO) as Quick Estimate (QE) with six weeks’ time lag. The QE then undergoes first revision after one month and final revision after three months of release of QE incorporating additional/revised production data received during the intervening period. There is no agenda to review the IIP data for the months/quarters which have already been finalized as per above time schedules.

                    In order to capture the dynamics in the structure and composition of the industrial production, base year of IIP is revised at regular intervals. Accordingly, a Working Group has been set up under the Chairmanship of Dr.Saumitra Chaudhuri, Member, Planning Commission, for reviewing the existing methodology used in compilation of IIP and shifting to a new base year, finalizing the new weighting diagram, selection of appropriate item basket and method of data collection for the same and giving its recommendations in this regard.

 

Annexure-I

 

Annexure referred to in reply to part (b) of Lok Sabha Unstarred Question No. 654 to be answered on 13.08.2012 regarding ‘Industrial Production’

Table-1: Sector-wise and Month-wise Growth Rates of IIP for Q1 of 2011-12 and 2012-13 (in %)

(Base: 2004-05)

 

Table-2: Growth of Industry in terms of IIP (in %)

(Base: 2004-05)

 

Table-3: Growth of Core Sector Industries (in %)

(Base: 2004-05)

This information was given by the Minister of State  for Commerce &     Industry Shri Jyotiraditya M. Scindia  in written reply to a question in Lok  Sabha today.

DS/GK

Industrial production slowdown due to manufacturing and mining weakness prompts policy and legislative measures to revive investment. Index of Industrial Production contracted in April-June 2012-13 due mainly to manufacturing and mining weakness; manufacturing was affected by global uncertainty, sluggish domestic demand and higher interest rates, while mining was constrained by regulatory and environmental clearances and reduced international demand. Government measures include the National Manufacturing Policy with National Investment and Manufacturing Zones, facilitation of foreign investment, skills development, promotion of private and foreign participation in oil and gas, and the Mines & Minerals (Development and Regulation) Bill, 2011. A Working Group will review IIP methodology and base-year revision.