15-year low IIP

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The industrial output of India has recorded a stunning decline in February 2009 owing to a high base effect when compared with the corresponding period of the previous year. According to the official data of Index of Industrial Production (IIP), India's factory output has condensed a record 15-year low of 1.2% in February 2009 on a Y-o-Y basis as against 9.5% growth in February 2008. In the industry segment, the IIP data reveals that as many as nine out of the seventeen industry groups have indicated negative growth in the month of February 2009, against the corresponding previous year period. The manufacturing sector was spotted with a decline of 1.4%, which constitutes approximately 80% in the IIP.

However, industry experts and economists had all predicted this decline and had eyed the high base effect as the sole reason for this decline. Going by the de-seasonalized data, the IIP went up by 0.2% on month-on-month basis in February 2009.

The steps undertaken by the Central bank of the country will stay here for some time along with the government playing a proactive role in the economic and industrial growth of the country. The IIP figures are expected to remain passive till the first quarter of 2009-10. The other factor that might provide a cushion to the overall industrial production is the buoyancy in the investment proposals.

Another set of industry experts believe that IIP numbers are estimated to remain mildly negative as few of the export-oriented sectors will continue to feel the pinch of the global crisis. Stimulus packages, would however cast a positive impact on the economy and help the low IIP spurt up.