News and Events

April IIP at 0.1% versus -3.2% in March

The Index of Industrial Production (IIP) for the month of April grew at a marginal 0.1 per cent versus a contraction of (-) 3.2 per cent in March. The March IIP numbers were revised to (-)3.2% as against (-) 3.5% cited earlier.

The mining sector growth fell to 3.1 per cent versus -1.3 per cent in March. While the manufacturing sector grew at a meagre 0.1% versus -4.4% in March, the electricity sector saw a robust growth of 4.6% versus 2.7% in March.

The basics goods sector saw a growth of 2.3 per cent versus 1.1 per cent in March. The intermediate goods growth in April fell to 1.4 per cent. The consumer-durable goods saw a big jump in growth to 5% as against 0.2% in March.

Rating agency Standard & Poor's on Monday warned that India is poised to earn the unwanted distinction of becoming the first BRIC nation that may be downgraded to junk status due to worsening growth, but the government insists the economy is on the mend.

In an unusually direct reference to what it perceives to be poor quality of the nation's political leadership, S&P has expressed concerns that ballooning government expenses, widening trade deficit and political vacuum could lead to protectionist policies.

Finance minister Pranab Mukherjee has strongly denounced the threat of ratings downgrade by Standard & Poor's, saying the government was fully seized of the situation and confident of turnaround in the coming months.

In a release issued late Monday Mukherjee said he 'rejects S&P report that India could be the first BRIC country to falter" adding that all that had changed since the rating agency had cut the outlook on India's investment grade rating from stable to negative was that growth had dropped below expectation in the fourth quarter.

Earlier in the day, before S&P released its report, Mukherjee rebuffed those predicting gloom and doom for the Indian economy after GDP growth plunged to a nine-year low.

"I do not accept the prophecies of self-styled cassandras that GDP growth will go down," he said at a function in capital barely hours before S&P said India could be the first BRIC country to lose investment grade rating.

The disappointing GDP numbers triggered a raft of earnings and growth downgrades from global banks, many of them blaming the policy makers for the sharp slowdown, some even calling it a 'self goal'.

Growth estimates for 2012-13 are now around the 6% mark, well off the 7.6% plus minus 0.25% expected by the government at the beginning of the year.

India's economy expanded 6.5% in 2011-12 and 5.3% in the last quarter, both a nine-year low, but final fiscal deficit for the year is likely at 5.76% against 5.9% estimated in the Budget.