It was mainly due to the excellent performance in manufacturing, which hasthe weightage of about 80 per cent in the IIP, that industrial growth ratemore than doubled in the last fiscal. In March, manufacturing grew by 9.6per cent, while it was 5.4 per cent in March 1999. For the entire 1999-2000,manufacturing grew by 9 per cent against 4.3 per cent in the previousfiscal.

Mining, with about 10 per cent weightage in the IIP, showed signs ofrecovery in 1999-2000 with 0.6 per cent against 0.6 per cent in 1998-99. InMarch, the rate was 2.2 per cent compared with the -4.9 per cent in March1999.

Electricity, with about 10 per cent weightage in the IIP, improved slightlyin the last fiscal with 6.6 per cent growth, up from 6.5 per cent. In March,too, there was slight improvement, 5.6 per cent against 5.5 per cent inMarch 1999.

Economists, however, are not very excited with the impressive industrialperformance in 1999-2000, as they say that there is a big question mark overthe sustainability of this growth. BB Bhattacharya, professor with theInstitute of Economic Growth, said that industrial growth can be sustainedby investments which are linked with capital goods performance. And capitalgoods performance is deteriorating.

Capital goods showed negative growth of 1.8 per cent in March, against ahigh 11.8 per cent in March 1999. For 1999-2000, too, the growth rate camedown to 4.8 per cent from 11.8 during the previous fiscal. Capital goodsregistered a positive growth rate for the entire year, despite negativegrowth in the last few months, is due to the fact the in the earlier monthsof the last fiscal the sector performed well.

Pradeep Srivastava, chief economist with the National Council of AppliedEconomic Research, also expressed concern over the decline in capital goodsperformance. The fact that non-oil imports are stagnating also does notaugur well for the economy, he added.

Basic goods improved in March with 4.7 per cent growth, against 0.1 per centin March 1999. For the entire fiscal, growth was 5.1 per cent, as comparedto 1.4 per cent in 1999-2000. Intermediate goods, too, improved in Marchwith 19 per cent against 7.5 per cent in March 1999. For the entire fiscal,growth was 15 per cent, as compared to 5.9 per cent in 1999-2000.

In the two segments of consumer goods, conflicting trends can be noticed.While durables registered a growth of 6.7 per cent in March, down from 14.5per cent in March 1999, non-durables increased from 1.7 per cent in March1999 to 6.5 per cent. For the entire fiscal, however, non-durables shot upfrom 4.7 per cent in 1998-99 to 12.2 per cent in 1999-2000. Non-durablesalso increased from 1.8 per cent in 1998-99 to 4 per cent in 1999-2000.The entire consumer goods sector grew by 5.7 per cent in the last fiscal, ascompared to 2.4 per cent in 1998-99. In March, growth was 6.6 per centagainst 4.4 per cent in March 1999.

The economists explain the performance in the two segments of consumer goodsin terms of the arrears paid for the Fifth Pay Commission and goodagriculture in 1998-99. There was spurt in the demand for durables whengovernment servants were using their arrears to purchase items likerefrigerators and televisions, Bhattacharya said, adding that with growth inthis sector fizzled out with the arrears money.

Srivastava pointed out that the pick up in industrial demand was on mainlytwo temporary factors-the arrears and strong agriculture in 1998-99.However, rise in global exports, which have positively impacted Indianexports and industry, is not a temporary factor, he added.