core sector communique

FM: IIP Estimates for Month of July 2010 are Extremely Encouraging

Union Finance Minister, Shri Pranab Mukherjee has said that the estimates of the Index of Industrial Production (IIP) for the month of July 2010 are extremely encouraging. The Finance Minister was responding to the quick estimates of IIP released today by Central Statistical Organization (CSO). As per CSO estimates, the overall growth in industrial sector during the month of July 2010 is 13.8% as compared to the 7.2% increased recorded in July 2009. Industrial growth has also bounced back during the month as in June 2010, the growth rate had decelerated to 7.1%. Cumulative growth during the April-July 2010-11 has been 11.4% as compared to mere 4.7% growth during corresponding months of the 2009-10.

The Finance Minister said since the overall growth of GDP in the second quarter of this year is expected to be slower than in the first quarter because of a base effect a year ago, this news of extra buoyancy in the industrial sector is indeed very heartening. He further said though the capital goods production has increased by 63% yet, we must not over-interpret this very high figure. He said that we do know that there are fluctuations in this sector from month to month. The Finance Minister further added that nevertheless, this figure indicates long run optimism on the part of Indian industry and this, once again, underlines my own optimism concerning the growth of the Indian economy. The Finance Minister said that as with bad news, we must also treat good news with caution. He said that we must not sit back and will have to continue with our efforts to take the Indian economy robustly forward.

Earlier, the manufacturing sector, which is a major source of employment generation, has also shown outstanding growth in July. Its growth rate of 15% for this month exceeds the average growth of the Q1. Consumer durables growing at 22.1% in July, though less than the growth in the first quarter of this year, shows that long run consumer confidence also continues to be high.