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Falling industrial output numbers in Feb. due to high base effect: Analysts



By Tara Mody
12 April 2009 @ 10:35 pm IST

Mumbai - Economists have attributed the record decline in India's industrial output in February 2009 to high base effect during the corresponding period the previous year.


A labourer takes a break as another works at a mild steel factory in Siliguri, India
A labourer takes a break as another works at a mild steel factory in Siliguri, India, July 16, 2008. Economists have attributed the record decline in Indias industrial output in February 2009 to high base effect during the corresponding period the previous year. (Reuters Photo)
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According to the latest Index of Industrial Production (IIP), India's factory output has contracted a record 15-year low of 1.2 percent in February 2009 on a year-on-year basis as against 9.5 percent growth in February 2008.

In terms of industries, the IIP data showed that as many as nine out of the seventeen industry groups have shown negative growth during the month of February 2009 as against the corresponding month of the previous year.

Of special concern was the 1.4 percent decline registered by the manufacturing sector, which constitutes around 80 percent in the IIP, compared to 9.6 percent growth a year ago.

However, according to the economists, the latest IIP numbers are according to their expectations and the decline was principally due to high base effect.

According to Yashika Singh, research head at Dun & Bradstreet India, the negative growth of 1.2 percent in IIP for February 2009 could, in some part, be attributed to a high base effect.

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