The chart shows the sectors that have contributed the most to industrial production growth over the last six months.
For each month between May and October, the top three sectors that have shown the highest contribution to growth have been selected.
-web.jpg "Ahmed Raza Khan/Mint")
The conclusions that follow are:
1) Gems and jewellery has been the biggest contributor to IIP (Index of Industrial Production) growth in the last five months. It accounted for 31% of total IIP growth in June, 26% in July and August, 40% in September and 20% in October. Analysts point out that the exports of gems and jewellery have declined this fiscal year. That suggests that investors are piling into gold jewellery once again. What is intriguing though is that the Reserve Bank of India, or RBI, data on the sectoral deployment of credit for October 2015 show that bank loans outstanding to the gems and jewellery sector declined by 1.6% this fiscal year and grew by a mere 1.3% year-on-year. If the production of gems and jewellery is indeed taking giant strides, how come it isn’t reflected in the increased bank credit to the sector?
2) Electricity and rubber insulated cables have been the biggest contributors after gems and jewellery. That suggests a lot of work going on in the power sector. That ties in with the RBI data on loans outstanding to the power sector, up 10.6% year-on-year in October compared with a credit growth of 4.6% for industry as a whole. The growth in the power sector may also be the reason for the bounce in the capital goods component of the IIP.
3) Taken together, gems and jewellery, rubber insulated cables and electricity accounted for 41% of the 9.8% growth in IIP in October. That’s much better than in September, when they accounted for 100% of IIP growth. But we have to wait and see whether growth is indeed becoming more broad-based, because inventory stocking ahead of Diwali could have boosted the other consumer sectors in October.
