IIP Growth in April 2009 1.4% over April 2008

The details of the IIP nos (from the press release of the govt) makes an interesting study.

A quick review tells us the following .

1. Eleven out of seventeen industry groups showed a positive growth. Seems good so far.

2. The industry group ‘Wood and Wood Products; Furniture and Fixtures’ have shown the highest growth of 31.4%, followed by 12.6% in ‘Wool, Silk and Man-made Fibre Textiles’ and 10.2% in ‘Non-Metallic Mineral Products ’. Furniture and Fixtures with the highest growth. Should that enthuse us?

3.On the other hand, the industry group ‘Food Products’ have shown a negative growth of 34.4% followed by 12.4% in ‘Leather and Leather & Fur Products‘ and 5.1% in ‘Other Manufacturing Industries’.

4. As per Use-based classification, the Sectoral growth rates in April 2009 over April 2008 are 4.6% in Basic goods, (-)1.3% in Capital goods and 7.1% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 16.9% and (-)10.4% respectively, with the overall growth in Consumer goods being (-)4.7%.Negative growth in capital goods is a pointer to industry confidence. Growth in intermediate goods does not tell us story till it is clear for which products these intermediate goods are used. Growth in consumer durables may be seen as encouraging.

5. Alongwith the Quick Estimates of IIP for April 2009, the indices for March 2009 have undergone the first revision and those for January 2009 have undergone the second (final) revision in the light of the updated data received from the source agencies. (It may be noted that revised indices (first revision) in respect of February 2009 have already been released in May 2009 and these indices shall undergo final (second) revision in July 2009). This is the best part of it. So the final figures for April 2009, shall not be known till August 2009. How much would it differ from the quick estimates is anybody's guess.

Now for a comparison with the previous months.

1. The general index is at 270.1 for April 2009, down from 302.6 for March 2009. Of course, the figure for March 2009 will only be finalised next month, so its prudent to compare with earlier months.

2. The general index stood at 274.2 in Feb 2009 (higher than April 2009), 284.8 in Jan 2009 (higher than April 2009), 284 in Dec 2008 (higher than April 2009) and 267.6 in Nov 2008 (marginally lower than April 2009). In short, April 2009 figures indicate a contraction with respect to the previous quarter.

3. The index is lower in April 2009 as compared to May 2008 (274.6) too. So we may see negative nos in May 2009, until and unless there is real growth soon.

4. In the latter half of 2008, the index fell to 262.9 in Oct 2008. So in Oct 2009, expect positive growth in nos. even if there is stagnation.

We seem to be far away from economic recovery.