India's industrial production growth falls to 3% in March 2008.

A poor performance by mining, manufacturing and electricity sectors resulted in a dismal industrial production growth of 3 per cent during March 2008, as against 14.8 per cent in the same month of the previous year. Data released by Central Statistical Organization revealed that the production in manufacturing sector, which has an 80 per cent share in the Index of Industrial Production, grew by 2.9 per cent as against a robust 16 per cent in the same month of the previous year.

In the month under consideration, electricity production grew by 3.7 per cent as against 7.9 per cent in March 2007. Mining production growth also slumped to 3.8 per cent in March 2008 as against 8 per cent in the corresponding month of the previous year. Consumer durables production in March dipped by 2.1 per cent as against a growth of 3.8 per cent in March 2007. Capital goods production in March grew by 8.6 per cent as against 18.1 per cent in the same month of the previous year.

There is a silver lining, though. Part of the drop appears to be because of the base effect of the industrial growth in March 2007, the base for calculating growth in March 2008, which was unusually high. If we look at the numbers month-on-month (M-o-M) and look at March over February, we will notice a 23-point increase in the general index, which will translate to a growth of nearly 8.5%. Basically, in March 2007, growth had been 37 points over a base of 250, so that was a huge increase.

Thus considering the base effect and the M-o-M figures, there is really no signs of slowing down yet. The higher sequential growth (March over February), which had turned negative in February 2008, does underscore the point. However IIP figures for the coming months would be keenly watched to see whether there are actual signs of slowing down on account of prevailing higher interest rates and rising input costs.