20/08/2016

72%hike,84%fall:RubberinsulatedcablesplayhavocwithIIPdespite0.12%weightageTheEconomicTimes

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72%hike,84%fall:Rubberinsulatedcablesplayhavocwith
IIPdespite0.12%weightage
PostaComment

ByKirtikaSuneja,ETBureau|Aug20,2016,10.44AMIST

NEWDELHI:Anitemwithamere0.12weightageontheIndexofIndustrialProduction(IIP)
hasbeenplayinghavocwithfactorydataforyears,distortingtherealpictureeverymonth.
Thisisthecuriouscaseofinsulatedrubbercables,usedinanumberofindustries,mostly
forelectricitydistribution.
TheReserveBankofIndiadiscoveredthegremlinintheworksinitslatestmonetarypolicy
review."Theunevenperformanceofindustrialoutputreflectsthelumpyandorderdriven
contractionofinsulatedrubbercable,acomponentofcapitalgoods.Excludingthisitem,
industrialproductionroseat3%inthecurrentfinancialyear.Infact,capitalgoodsproduction
excludinginsulatedrubbercablesexpandedby8%,"thecentralbanksaid.
Thereareonlyfourfactoriesfromwhichdataiscollected,
basedonthe200405baseonwhichtheexistingIIPseriesis
made.

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Headlinenumbersshowindustrialproductionwasup2.4%inFY16whilecapitalgoodsoutputcontracted2.9%intheyear,verydifferent
fromthegrowthcomputedbyRBIwhenthesecablesareexcluded.InJunethisyear,sectorcontributiontogrowthis2.74%.Thismeans
withoutthisitem,IIPgrowthwouldhavebeen4.8%inJune.Officialsinthestatisticsoffice,whichcompilestheindex,saidtheitemhas
inherentvolatilityandisdemanddriven,whichundulyinfluencestheindex.
'Cable,rubberinsulated'accountsforjust1.4%ofcapitalgoodscomponentofIIPbutfroma72%growthinAugust2015to84%decline
inJunethisyear,itsbehaviourhasbeenerratic.Ithasbeenoneofthebiggestnegativecontributorstotheindexforthepastseven
months.
"InlinewithtrendssinceNovember2015,deepnegativegrowthinrubbercableindustryinJuneonceagaindistortedcapitalgoodsand
IIPgrowth.Excludingthisindustry,IIPgrowthwouldhavebeenhigher,"saidSaugataBhattacharya,chiefeconomistatAxisBank.
Thereareonlyfourfactoriesfromwhichdataiscollected,basedonthe200405baseonwhichtheexistingIIPseriesismade.
"Thisnumberisverylessbecausewehavetotakedatafromthesameunitsasinthebaseyear,"saidanofficial,addingthattheanomaly
willbecorrectedintheupcomingIIPserieswith201112asbase.Datawouldbecollectedfrom18factoriesandtheitem'sweightage
"significantlyreduced."Therearelargeordersincablelaying,runningintothousandsofkms.Thistakestimetocomplete,withdespatch
lagreflectinginIIP.
http://economictimes.indiatimes.com/news/economy/indicators/72hike84fallrubberinsulatedcablesplayhavocwithiipdespite14weightage/articleshow

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20/08/2016

72%hike,84%fall:RubberinsulatedcablesplayhavocwithIIPdespite0.12%weightageTheEconomicTimes

"Therearealimitednumberoffirmsproducingthiscableandordersaregenerallylumpy.Theremaybenoproductioninmanymonths
becauseordersarebeingcompletedbutoncetheyaredispatched,itgetscountedinIIP,"saidDevendraPant,chiefeconomist,India
Ratings&Research.MohinderGupta,presidentofAllIndiaRubberIndustriesAssociation,acknowledged,"Itsproductionvariesfrom
factorytofactory,dependingonthedemand.Hence,itisvolatileinnature."
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