NEW DELHI: For the first time since 1979-80, the overall index of industrial production came down in the last fiscal year, production fell by 0.1% in 1991-92, according to data compelled by the Central Statistical Organization (CSO).

During a year which saw sweeping policy changes aimed at liberalizing the Indian economy, domestic industry remained in the throes of a deep recession. In fact, in 1991-92, it seemed as if the sun had set on what were considered sunrise industries. The depressed conditions prevailing in the country’s manufacturing sector show no signs of lifting.

Preliminary statistics available with the Ministry of Industry for the two months of April and May indicate that output in the infrastructure sector and 19 major industries, including steel, fertilizer, sugar, cloth and automobiles, grew by a niggardly 0.6% over the corresponding period in 1991. These industries together have a weight of just over 50% in the overall index of industrial production,

Never in preceding 12 years has the annual growth of the index been negative as it was in 199192. The last year industrial production came down was in 197980 when the index dipped by 1.7%. However, the average growth rate during the 70s was 4.4%. During the first half of the 80s, the index grew by an average of 7% and the second half witnessed a growth of 8.5%.

Though the writing on the wall was clear, the Government preferred to look at the industrial scenario through tinted glasses. As late as end-February, the Economic Survey for 1991-92 claimed: “If an optimistic view..1s taken, the growth of industrial production during the current year (1991-92) could be expected to be in the range of 3 to 4%.”

It is now clear that official economists ignored realities even though the Survey pointed out that between April and November 1991, the index of industrial production had fallen nearly 1%. Significantly  many of the industries which were responsible for the high growth rate of the 80s had to bear the brunt of recession last year.

Thus  even though the infrastructure sector expanded production of capital goods crashed by 12.8% in 1991-92 and output of consumer durables by 12.5%. Sectors accounting for half the weight in the overall index cither stagnated or shrank,

An analysis of the performance of 155 industries reveals in seven industries, output fell by more than 2.5%. These worst-hit industries (with percentage decline in production) were linoleum (66.5), radio receivers (56), vitamin A (53.8), new sprint (44.1), road rollers (43.6) and cement machinery (37).

Article extracted from this publication >> Aug 14, 1992