Dalal Street Investments

Industrial Production 1.3% – A Shock

October 11, 2008

Aug 08 India Industrial Production slows to 1.3% significantly lower than expectations and the lowest level seen since Oct 98. While growth was expected to come in lower due to the high base (Aug 07 @ 10.9%), the 1.3% number was a shock. On a sectoral basis, mining did relatively well at 4%, while growth in manufacturing and electricity was 1.1% and 0.8%, respectively. Cumulatively, growth during Apr-Aug slowed to 4.9% vs. 10% last year.

Capital goods was up 2.3% vs. the high base of 30.8% last Aug; Consumer goods held up at 5% but aided by the flat growth last year. What is worrying is the contraction in intermediate goods at -6.2% – the lowest level seen over 13 years. Primary components of intermediate goods include
cotton yarns, filaments, pipes, auto ancillaries, LPG and natural gas, and polyester fibers, paints and varnishes.


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