The fact and the fiction

Did industrial production in India grind to a near-halt in the quarter ending March, and fall into negative territory in the June quarter? If you go by the Index of Industrial Production (IIP), it would appear so; indeed, in June, the IIP contracted 1.8% over a year ago. But if you look at the top line growth of a common sample of around 2,200 corporates, you get a slowdown of around 30%—that’s a big slowdown, but certainly nowhere near as frightening as what the IIP shows. Indeed, the Sensex trading over 17,600, which is 5% higher than a year ago, suggests investors are discounting the IIP numbers as well.

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