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Industrial production to grow by 7.4% in FY 13: CMIE

The country's industrial production is expected to grow by 7.4 per cent in FY 13 as against the forecast of 5.1 per cent for FY 12, Centre for Monitoring Indian Economy (CMIE) said in its monthly review.

Industrial production growth stood at 8.2 per cent in FY 11.

The manufacturing sector is expected to witness a healthy growth of 6.5 per cent in FY 13, against forecast of 4.9 in FY 12, CMIE said. This growth would be driven by over 10 per cent rise in production of motor vehicles and other transport equipment, machinery, basic metals and wearing apparels.

Rising corporate salaries, increase in rural income, softening of interest rates, improvement in availability of finance, new models and expansion of dealers’ network could boost passenger cars production by 13.1 per cent in FY 13.

Production of MUVs, two-wheelers and three-wheelers is also expected to grow by around 10 per cent. This will lead to higher demand and production in auto ancillary category. Huge capacity additions in the industrial and infrastructural construction segment and increase in production of automobiles and machinery is also expected to generate higher demand for basic metals in FY 13, CMIE said.

The mining industry, which saw a stagnation in FY 12, is expected to grow by a healthy 5.6 per cent next year.

CMIE expects that electricity industry will continue to be a growth driver, clocking a double-digit rise in generation in FY 13. The growth in electricity generation will accelerate to 13.2 per cent in FY 13 from 8.3 per cent in FY 12. Thermal power generation, which accounts for 80-85 per cent of power generated in India, is expected to grow by a smart 14.3 per cent owing to huge capacity additions and a likely improvement in availability of coal. Nuclear power generation too is expected to grow by 19 per cent, while hydel power generation is expected to grow by 6.5 per cent.

Coal production may grow by 8.5 per cent in FY 13 after two years of stagnation. Coal producers will be able to raise the output following the scrapping of go/no go classification of coal blocks and fresh capacity addition of 24 million tons.

Crude oil output is also expected to grow by a healthy 6.1 per cent in FY 13, as ONGC and Cairn India start production from new oil fields. Natural gas production is expected to grow by 5.3 per cent, after falling by 7.9 per cent in FY 12.

Coal, crude oil and natural gas account for 70 per cent of the output of mined products. A likely improvement in production of these is expected to push up total output of mined products by 5.6 per cent in FY 13, CMIE said.

CMIE, however, expects output of food products to remain flat, after growing by a smart 11.5 per cent in the current year. The main culprit would be sugar, which accounts for over 20 per cent of the total food and beverages production; its output is expected to fall by 2.8 per cent in FY 13 due to fall in availability of sugarcane.