Unexpected IIP

The Industrial production growth in January registered 5.3 per cent against 11.6 per cent same month last fiscal and it was declared on 12th March, 2008. This huge fall in the Industrial output level has taken investors, analysts and others in grave concern. Due to such disheartening declaration the Indian stock market on 12th March ended with marginal gains while it opened pretty strong. This data undoubtedly is an unexpected figure as the expectation was around 8 per cent. The fall is mainly due to the underperformance of the capital goods and ongoing negative trend of the consumer durables too. Manufacturing sector do have a major portion in the Index of Industrial Production (IIP), which accounts to be 80 per cent, however, this has fallen down to 50 per cent. The performance of consumer durables was at below level as usual. It showed a production growth moving down to 3.1 per cent as compared to 5.3 per cent last January. This fall is a corollary of less consumer demand due to increase in high interest rates.