Manufacturing sector growth shrinks to 2.2%
By Faraz Ahmad
The Corporate sector in India had rid the Sonia Gandhi led UPA government on the assumption that the economy was stagnating because of Sonia’s policies and the alleged corruption in the Manmohan Singh government and in turn backed the then Gujarat chief minister Narendra Modi to the hilt to boost economic growth.
Naturally therefore right wing political pundits like Arun Jaitley were confident that there would be sudden spurt in growth, once a BJP government led by Modi assumed power. He often talked of flight of capital from the country because of the wrong policies of the previous government and therefore logically predicted how it simply required a new pro-business government to alter the business and economy scenario. Jaitely is still predicting a 10 per cent growth in India’s economy. But somehow one year of Modi regime is belying such expectations.
The latest report of the Index of Industrial Production (IIP) quoted by the Indian Express on July 11 is, if anything, alarming for the NDA government and the Indian business as well, especially when compared to the previous government detested and abhorred by the business community. The IIP acts as a barometer of growth in the investment and production in industries which propel the overall economy. The report said, factory output fell from 5.6 per cent in May 2014 to 2.7 per cent in May, 2015.
The IIP data in respect of the overall manufacturing sector is even more dismal. It shows a growth of just 2.2 per cent compared to 5.9 per cent in May, 2014. Similarly capital goods grew only by 1.8 per cent compared to 4.2 per cent in the same period last year and consumer goods shrunk further from 4.6 per cent last year to 1.6 per cent.
A sense of uneasiness with the Modi bombast on economy has started showing, with the FICCI president Jyotsana Suri admitting “Manufacturing sector growth seems to be picking up though it remains sluggish. Negative consumer demand growth is an area of concern…”
The cumulative growth for the period April-May this year stood at 3 per cent as compared to 4.6 in the corresponding period last year.
If there are any sectors adding to growth it is petroleum (thanks to the falling international price of crude oil), coal which has just been auctioned and therefore the data takes into consideration the investment made in purchase of coal blocks through the much publicized auctions and nuclear fuel (who uses this anyway?). The rest is all apparel sector, followed by furniture industry. With these sectors depending largely on the Richie richs of the country (since hardly any of this is now exported) how many people benefit from this?