FEB IIP - THANK GOD IT'S FRIDAY EVENING!
By Ruma Dubey
| PARTICULARS | Feb’14 | Jan’14 | Dec’13 | Nov’13 | Oct’13 | Sep’13 | Aug’13 | July’13 | June’13 | YoY | ||||||||||||
| IIP | -1.9% | 0.1% | -0.6% | -2.1% | -1.8% | 2.0% | 0.6% | 2.6% | -2.2% | 0.6% | ||||||||||||
| Cons Durable | -9.3% | -8.3% | -16.2% | -21% | -12% | 10.8% | -7.6% | -9.3% | -10.5% | -2.6% | ||||||||||||
| Manufacturing | -3.7% | -0.7% | -1.6% | -3.5% | -2% | 0.6% | -0.1% | 3% | -3.2% | 2.1% | ||||||||||||
| Capital Goods | -17.4% | -4.2% | -3% | 0.3% | 2.3% | -6.8% | -2.0% | 15.6% | -6.6% | 9.1% | ||||||||||||
| Basic Goods | 3.9% | 0.9% | 2.4% | 0.7% | -1.6% | 5.4% | 1.5% | 1.7% | -1.9% | -1.8% | ||||||||||||
| Mining | 1.4% | 0.7% | 0.4% | 1% | -3.5% | 3.3% | -0.2% | -2.3% | -4.1% | -7.7% | ||||||||||||
| Electricity | 11.5% | 6.5% | 7.5% | 6.3% | 1.3% | 12.9% | 7.2% | 5.2% | 0 | -3.2% | ||||||||||||
| Cons Non Durbl | -1.2% | 4.4% | 1.6% | 2.5% | 1.8% | 11.3% | 5.0% | 6.8% | 5% | 3.2% | ||||||||||||
| Interm Goods | 4.2% | 3.4% | 4.5% | 3.3% | 1.8% | 4.1% | 3.6% | 2.4% | 1.1 | -0.8% |
The IIP for February came in much lower than expected, in fact a complete disappointment. Almost every one had expected the IIP to come in at least in the positive, encouraged by the small green shoots which had seemed to have germinated in January IIP. This number for February, clearly shows that the industry is going through a lot of pain and there is a degrowth across all the sectors. The growth in electricity does not come as a surprise at all given the fact core sector growth rate for February shot up to 4.5% on the back of recovery in the output of electricity, coal and crude oil
In terms of industries, 13 out of the 22 industry groups in the manufacturing sector have shown negative growth during the month of February 2014 as compared to the corresponding month of the previous year. The industry group ‘Radio, TV and communication equipment & apparatus’ has shown the highest negative growth of - 34.1%, followed by - 24.6% in ‘Electrical machinery & apparatus n.e.c.’ and - 21.3% in ‘Wearing apparel; dressing and dyeing of fur’. On the other hand, the industry group ‘Furniture; manufacturing’ has shown positive growth of 9.3%, followed by 9.1% in ‘Textiles’ and 6.1% in ‘Coke, refined petroleum products & nuclear fuel’.
Some of the important items showing high negative growth are: ‘Generator/Alternator’ [(-) 48.9%], ‘Heat Exchangers’- 44.8%, ‘Aluminium Conductor’ - 42.4%, ‘H R Sheets’ - 40.9%, ‘Telephone Instruments (incl. Mobile Phones & Accessories)’ - 36.3%, ‘Boilers’ - 36.3%, ‘Cable, Rubber Insulated’ - 32.2%, ‘Earth Moving Machinery’ - 28.6%, ‘Apparels’ - 27.6%, ‘Colour T.V. sets - 26.8%, ‘Block Board’ - 25.6% and ‘PVC Pipes and Tubes’ - 23.4%.
On the other hand, those which showed positive growth were ‘Woollen carpets’ at 105.3%, ‘Terry Towels’ 29.8%, ‘Steel Structures’ 24.7%, ‘Scooter and Mopeds’ 22.8%, ‘Leather Garments’ 22.6% and ‘Gems and Jewellery’ 21.7%.
Well, the markets are hitting new highs and this is the ground reality – a negative IIP, with nothing really changing, except this new found love by FIIs for India. The next IIP numbers, which would be for March, will be declared on 12th May, five days before the Lok Sabha election results. So in all likelihood, next month too, after the IIP numbers we would be saying the very same things – let the new Govt come in and then things will change.
But really, whoever comes to power, be it a coalition or BJP winning the majority, they will not be able to change things overnight but we can only hope then that there are chances of improvement, light at the end of the dark tunnel. That improvement in sentiments to actual IIP numbers will take some time.
Election results apart, we need to once again watch out for CPI inflation, which after the hail storm in Maharashtra and Madhya Pradesh is expected to hike up prices of vegetables and fruits. And that apart, seasonally too, once the monsoon is over, food prices during summer peak up. So seasonally too, this is the time when inflation will once again raise its ugly head up.
While on the subject of monsoon, let’s also understand that El Nino is expected to make an appearance this year in India and that does not bode too well for a country which is so dependent on agriculture. And the effect of a poor monsoon will have a debilitating effect on an already crippled economy. So let’s not be naïve and hope that from 18th of May, all our troubles will vanish.
For now though, enjoy the really long weekend, extending into Monday. Tuesday is another day and then we have CPI to worry.