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September industrial output growth slows sharply to 4.4%

By Religare

India's industrial output in September rose at a much slower-than-expected 4.4 percent from a year earlier, as against previous month's revised annual growth of 6.92 per cent, the government data showed today.

The manufacturing output rose an annual 4.5 percent in September, the federal statistics office said in a statement. The industrial output rose 10.4 percent in the 2009/10 fiscal (April-March) as against 2.8 percent registered in the previous financial year.


However, the revamped wholesale price index that shows a lower inflation figure will give a statistical boost to the industrial output data for October.

A senior government official confirmed that once it was restated using the new inflation series, there would be an absolute increase in the numbers for industrial production.

While in China, where industrial output rose 13.1 percent last month, the officials are grappling with money inflows from bets on yuan gains and a surging trade surplus. The consumer prices surged 4.4 percent in October in China, the most in two years.

The index of industrial production (IIP) is a volume index that measures the quantity of goods produced.

The key items of the IIP that are reported in value terms include machinery as well as machine tools, and ship building, which have a large weight in the index.

The Index of Industrial Production (IIP) compares the growth in the general level of industrial activity in the economy with reference to a comparable base year. In order to capture the structural changes in the industrial sector, the base year of the all-India IIP which was commenced in India in 1937 was revised in 1946, 1951, 1956, 1960, 1970, 1980-81 and 1993-94. The current series of all-India IIP (base 1993-94) was released in May 1998. It covers the Mining, Manufacturing and Electricity sectors with weights of 10.47%, 79.36% and 10.17% respectively.

The Quick Estimates of IIP are compiled on the basis of data furnished by the source agencies located in various Ministries/Departments/Subordinate Offices of the Government of India. The index is released within six weeks from the reference month and are subsequently revised in the next and the third month based upon the revised production data furnished by the source agencies.

Story first published: Friday, November 12, 2010, 23:09 [IST]
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