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    Report On Index of Industrial Production of Manufacturing Sector From APRIL 2008 TO MARCH 2010

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    noorinder
    The document analyzes the Index of Industrial Production (IIP) for India's manufacturing sector from April 2008 to March 2010. It finds that the manufacturing sector initially declined due to the global recession but then grew from 2009 onward, supported by fiscal and monetary stimulus policies from the government. These policies included interest rate cuts, spending increases, export incentives, and foreign investment reforms. By late 2009 and 2010, most industry groups in the manufacturing sector were seeing positive production growth again. Charts of the overall IIP and manufacturing sector index over this period show an initial decline followed by a recovery.

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    Report On Index of Industrial Production of Manufacturing Sector From APRIL 2008 TO MARCH 2010

    Uploaded by

    noorinder
    46 views10 pages
    The document analyzes the Index of Industrial Production (IIP) for India's manufacturing sector from April 2008 to March 2010. It finds that the manufacturing sector initially declined due to the global recession but then grew from 2009 onward, supported by fiscal and monetary stimulus policies from the government. These policies included interest rate cuts, spending increases, export incentives, and foreign investment reforms. By late 2009 and 2010, most industry groups in the manufacturing sector were seeing positive production growth again. Charts of the overall IIP and manufacturing sector index over this period show an initial decline followed by a recovery.

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    The document analyzes the Index of Industrial Production (IIP) for India's manufacturing sector from April 2008 to March 2010. It finds that the manufacturing sector initially declined due to the global recession but then grew from 2009 onward, supported by fiscal and monetary stimulus policies from the government. These policies included interest rate cuts, spending increases, export incentives, and foreign investment reforms. By late 2009 and 2010, most industry groups in the manufacturing sector were seeing positive production growth again. Charts of the overall IIP and manufacturing sector index over this period show an initial decline followed by a recovery.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    46 views10 pages

    Report On Index of Industrial Production of Manufacturing Sector From APRIL 2008 TO MARCH 2010

    Uploaded by

    noorinder
    The document analyzes the Index of Industrial Production (IIP) for India's manufacturing sector from April 2008 to March 2010. It finds that the manufacturing sector initially declined due to the global recession but then grew from 2009 onward, supported by fiscal and monetary stimulus policies from the government. These policies included interest rate cuts, spending increases, export incentives, and foreign investment reforms. By late 2009 and 2010, most industry groups in the manufacturing sector were seeing positive production growth again. Charts of the overall IIP and manufacturing sector index over this period show an initial decline followed by a recovery.

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    You are on page 1of 10

    REPORT ON INDEX OF

    INDUSTRIAL PRODUCTION OF
    MANUFACTURING SECTOR FROM
    APRIL 2008 TO MARCH 2010

    Based on “Press Information Bureau Government of India”


    taking Base year index as 1993-94
    INDEX OF INDUSTRIAL PRODUCTION
    FOR MANUFACTURING SECTOR
    FROM APRIL 2008 TO MARCH 2010

    Based on “Press Information Bureau Government of India” taking


    Base year index as 1993-94

    Prepared for

    Mrs.(Dr.) Mona Bhalla (Professor of Economics)


    Unitedworld School of Business
    Mrs. Madhu Iyengar (Professor of Statistics)
    Unitedworld School of Business

    Prepared by
    Kinjal Adodra
    Noorinder Singh
    Ronak Deswal
    Jugal Shah

    December 3, 2010
    TABLE OF CONTENTS:

     Introduction……………………………………………...4
     Major affected areas……………………………………5
     Introduction of monetary policy……………………….6
     Introduction of fiscal policy…………………………….7
     Major changes in IIP……………………………………8
     Line Graph of IIP………………………………………..9
     Line Graph of manufacturing sector………………….9
     Bibliography…………………………………………….10
    Introduction:
    What is IIP: IIP is an Index which details out the growth of various sectors in an
    economy. Indian IIP constitutes mainly of sectors like mining, electricity,
    manufacturing and general.

    In case of India the base year has been fixed at 1993-94 hence the same would be
    equivalent to 100 points.

    Method to calculate IIP ------- Laspeyre’s Formula

    IIP: as per classification by economic activity, thee IIP is broadly split into three
    segments- Mining, Manufacturing and Electricity with weights of 10.47 %, 79.36%
    and 10.17 % respectively. The manufacturing sector is further split into 17 sub
    segments with ‘basic chemicals and chemical products’ and ‘Machinery and
    equipment other than Transport equipment’ have the maximum weightage of
    14% and 9.6% respectively.

    GDP fell in February 2008 majorly due to subprime crisis which occurred in USA.
    In economics, a recession is a general slowdown in economic activity over
    a sustained period of time, or a business cycle contraction. Production as
    measured by Gross Domestic Product (GDP), employment, investment spending,
    capacity utilization, household incomes and business profits all fall during
    recessions.
    Major affected areas:
     IT Enabled Services sector was the hit since a majority of Indian IT firms derive
    75% or more of their revenues from the United States as US market Crashed
    and it had an impact on Indian IT companies. They started Job cutting for the
    purpose of cost cuttings.
     Due to unemployment the demand for domestic goods decreased which led to
    fall in production.
     The Manufacturing sector suffered negative growth as there was decline in
    production due to which there was increase in marginal cost and total cost.
     There was slowing mainly in construction, transport, communication, trade,
    hotel and restaurant subsectors.
     Indian Exports decline due to US Market crash which led to decrease in
    demand of domestic goods in foreign market
     Bank credit demand decreases > due to uncertainty business confidence fell
    down> dampened demand has dented the corporate margins. Simultaneously,
    Bank was vigilant to give loans to industries because of industry slowdown.
     Production Decrease> IIP remain stagnant and registered negative growth
    (mainly manufacturing) > Investment demand decreased.
    Fiscal and monetary policies have helped India in
    dodging the recession and sustaining the economy.

    Introduction of Monetary Policy:


     Repo rate increase 50 bps from 8.5 % to 9%.
     CRR to be hiked by 25 bps to 9%
     RRP under the liquidity adjustment facility kept unchanged at 6%
     Money Supply increase by 20%
     Y-O-Y, CPI based inflation for agricultural and rural laborers grew to
    8.8% and 8.75% respectively in June 2008 from 7.8% and 7% a year ago.
     Export Increased by 21.7% in US $ terms during these years.
     The rupee depreciated by 5.4% against the dollars by 5% against the
    euro and 5.2% against the pound sterling and 1.3% against the Japanese
    yen.
    Introduction of Fiscal Policies:
    Changes in government Policies:
     Reserve bank shifted its policy from monetary tightening to monetary
    easing in response to easing inflationary pressures and moderation growth.
     Taking a cue from RBI’s monetary easing, most bank have reduced their
    deposit and lending rate.
     Demand was stimulated by launching 3 fiscal stimulus packages during
    December-08 - feburary-09 along with farm loan waiver package, payout
    following 6 pay commission and expanded safety net programmed from the
    rural poor.
     100-day plan to revive the economy are ways to ensure food security and
    better implementation of the rural employment guarantee scheme besides
    several measures to boost growth.
     In the beginning of 2009, the government of India further relaxed the
    norms for foreign direct investment (FDI) in various sectors.
    100% foreign investment will henceforth be permitted in mining of titanium
    bearing minerals.
     The new FDI policy has also done away with the norms of 26 per cent
    compulsory equity divestment in fuel and gas trading ventures.
     Consumer durables goods output continued to surge on the back of fiscal
    spending, growing an annual 46 % in December. A notable feature is that
    manufacturing and infrastructure industries such as mining and electricity
    have recorded encouraging growth numbers. Growth in manufacturing
    sector is back to normal.
     Government has cut duties and increased spending to protect growth and
    jobs.

    Major changes in IIP:


     Industrial output grew at its fastest pace on record in December, smashing
    forecasts, in further evidence of a strong economic recovery that could
    allow the government to follow the central bank in withdrawing stimulus.
     The Part which raised the IIP is the manufacturing sector which performed
    well and the growth came in at 11.1 % versus (-) 0.6 %.
     49 per cent FDI ceiling for commodity exchanges has further been divided.
    While the investment ceiling for FDI has been pegged at up to 26% that for
    FIIs has been fixed at 23 per cent, even no single investor would be
    permitted to hold a stake of more than five per cent.
     Considered as one of the most favorite investment destinations, the FDI
    inflow into is expected to touch $ 30 billion this fiscal year (2009-2010).
     The fall in October IIP was mainly because of manufacturing sector growth
    falling to negatively 1.2% from an increase of 13.8% a year earlier.
     On a sartorial basis, 10 out of 17 industry groups posted negatively growth
    in October.
     Growth in India's six core infrastructure industries slowed to 2.2 % in
    November 2008 as petroleum refinery products, electricity production and
    finished steel showed poor performance.
     The performance of the exports sector was dismal in January 2009. India's
    exports fell for the fourth month in a row in January 2009. Exports fell an
    annual 15.9% in January 2009 to $12.38 billion as the global slowdown
    shaved off demand for Indian goods.
     Six core sector industries comprising crude oil, petroleum refinery products,
    coal, electricity, cement and finished steel - recorded a growth of 2.2 per
    cent in February 2009 compared to a growth rate of 7 per cent in February
    2008, showing the first signs of a pick-up in industrial production.
     The manufacturing output for April has gone up to 0.7% in April 2008 (Y-o-
    Y).  As many as 11 out of 17 industry groups showed a positive growth.
    Line Graph of IIP:
    IIP
    350
    340
    330
    320
    310
    300
    290
    280
    270
    260
    8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0
    pr-0 ay-0 un-0 Jul-0 ug-0 ep-0 ct-0 ov-0 ec-0 an-0 eb-0 ar-0 pr-0 ay-0 un-0 Jul-0 ug-0 ep-0 ct-0 ov-0 ec-0 an-1 eb-1 ar-1
    A M J A S O N D J F M A M J A S O N D J F M

    IIP

    Line Graph of Manufacturing sector:

    Manufacturing sector Index


    380
    370
    360
    350
    340
    330
    320
    310
    300
    290
    280
    270
    8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0
    pr-0 ay-0 un-0 Jul-0 ug-0 ep-0 ct-0 ov-0 ec-0 an-0 eb-0 ar-0 pr-0 ay-0 un-0 Jul-0 ug-0 ep-0 ct-0 ov-0 ec-0 an-1 eb-1 ar-1
    A M J A S O N D J F M A M J A S O N D J F M

    Manufacturing sector Index

    Bibliography:
     www.indianexpress.com/.../iip...200910
     http://www.financialexpress.com/
     http://mostlyeconomics.wordpress.com/2010/05/21/iip-
    2009-10-update/
     http://www.mospi.gov.in/mospi_iip.htm
     http://www.businessstandard.com/
     Business statistics textbook

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