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Curtailing concerns of an industrial slowdown,the index of industrial production (IIP) accelerated to 13.7 per cent in July following receding growth during the fiscals first three months.
Although mining and electricity failed to impress by posting marginal growth,the index was salvaged by 14.9 per cent growth in manufacturing over 5.7 per cent growth last month.
Enthused by the progress in July,Finance Minister Pranab Mukherjee today pegged industrial expansion at 12 to13 per cent this year. He also said the manufacturing sector,which generates jobs,was performing well.
I expect average industrial growth to be between 12-13 per cent this year. Manufacturing,which generates employment is doing well, Mukherjee told reporters. When asked whether RBI will further tighten monetary policy to combat inflation,the Finance Minister said,Government and RBI are watching. Let us see. We will take actions as the situation demands. RBI is expected to raise its short-term borrowing and lending rates at its September 16 mid-quarter review. The Planning Commission today felt that there is case for revising economic growth projections upwards from the present 8.5 per cent,given the impressive growth.
These July figures,I would say,are better than what I had expected. On the whole,taking together April-July,it thus suggests we are on track at least to achieve the growth rate target…In fact,there may be a good case to marginally increase it (GDP target), Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.
Capital goods industry and consumer durable goods production expanded by 22.1 per cent in July,the same rate witnessed a year ago. Experts earlier had predicted the industry growth in single-digit number for the month of July because of the base effect.
Among the main industry segments,manufacturing activity expanded by 15 per cent from 7.4 per cent a year ago. Mining sector grew by 9.7 per cent from 8.7 per cent while electricity generation growth slowed down to 3.7 per cent when compared with previous 4.2 per cent growth.
The news is good. I had thought industrial growth would slow down in July. It has not happened. Thats a great thing, Ahluwalia said.
The double-digit growth in July is commendable following last months revised figured which ducked growth down to 5.8 per cent after preliminary estimates pegged it at 7.1 pet cent. This is almost double the market expectations, Crisil chief economist D K Joshi said. However,experts are not re-drawing their projections for the fiscal,calling Julys growth a simple normalisation following three months of slowed-growth. I dont see the IIP growth beyond 9 per cent this fiscal. These high numbers are not sustainable.
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