By Research Desk
about 2 years ago


By Ruma Dubey

October IIP came in at a jaw dropping 9.8% v/s 3.6% in Sept. Manufacturing which contributes over 75% to the IIP basket came in at 10.6% v/s 2.6% (MoM) . Even capital goods number came in at 16.1% v/s 10.5% (MoM). Consumer goods was very good at 18.4% v/s 0.6% (MoM) – combination of durables and non-durables. Consumer durables came in a 42.2% v/s 8.4% (MoM)!! This means we consumed 50% more consumer durables in Oct!

Whew! These are mind numbing numbers; almost unbelievable from what we see on the ground. The lower base effect – particularly in consumer and capital goods; more working days in October as festive holidays were in November and spur in demand due to festivals can be attributed as the reasons for this superb growth figures.  But no, it is not a sustainable kind of growth that we are looking at. This is more like a blip, a seasonal factor playing at its best.

In the IIP, in terms of industries, 17 out of 22 industry groups in the manufacturing sector have shown positive growth in Oct’15 v/s Oct ’14. They are - ‘Furniture; manufacturing, showing the highest positive growth of 139%, followed by 48% in Office, accounting and computing machinery, followed by 47.5% in radio, TV and communication equipments & apparatus. On the other hand, publishing, printing & reproduction of recorded media showed the highest negative growth of -10.2%, followed by 7% in medical, precision & optical instruments, watches and clocks and -3% in Coke, refined petroleum products & nuclear fuel.

Some of the important items showing high positive growth during the current month over the same month in previous year include Gems and Jewellery, Sugar Machinery, Telephone Instruments including Mobile Phone and Accessories, Ehtylene, PVC Pipes and Tubes, antibiotics and its preprations, Steel structures Cable, Rubber Insulated, Vitamins, Aluminium wires & extrusions, scooters, mopeds and passenger cars.

Some of the other important items showing high negative growth are: ‘Instant Food Mixes (Ready to eat), Ship building and repairs,  Polythene Bags including HDPE & LDPE Bags , Grinding Wheels, Furnace Oil and aviation turbine fuel.

How do we get corporate confidence up? That has to be the biggest question and not whether or not RBI will reduce or increase rates. RBI has been doing its job very well, with absolute diligence but the laggard causing this failure is obviously the Govt.  Very real supply constraints have developed like in infra, mainly land acquisitions which does not require big bang reforms. With no parliamentary approvals coming through, nothing really seems to be happening.

For now, there is no expectation of any interest rate cut as we have already got more than what we wanted. The markets are sure to react positively to this number but eventually it is individual company news which will guide the indices. All eyes will be on 16th midnight, waiting for Yellen to finally announce the rate cut and end the uncertainty…..

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