Industrial growth continues to moderate

Despite coming out of the negative territory it strayed into in October, India’s industrial growth continues to moderate month after month. As per the provisional figures from the ministry of commerce and industry, growth rate of the six core infrastructure industries group fell to 2.3% in December 2008 from 3.2% in the same month last year.

Main culprit was drop in output of steel and crude oil. Barring these two segments, all other were able to produce higher output in December 2008 compared to last year. Figures showed that output declined in crude, power generation and finished carbon and steel products while coal, cement and petroleum refinery were able to register a higher growth than year ago period.

Economists are expecting that broader growth in industry, as shall be revealed by the index of industrial production will also remain range bound between 2-4% for coming several months.

Indian economy is currently taking a much bigger hit from the ongoing global economic downturn than what was being anticipated at beginning of the credit crunch in west after the fall of Lehman Brothers in September last year. The Reserve Bank of India has curtailed the growth target for the fiscal to 7% with downward bias from over 9% growth achieved in FY08. International Monetary Fund on the other hand has projected a growth of merely 5.1% for India in the calendar year 2009.