Industrial output at nearly 3-year high of 6.4% in Aug

Tribune News Service

New Delhi, October 12

Industrial production grew at a nearly three-year high of 6.4% in August just before the festival season, surpassing expectations with capital goods and consumer durables posting good growth.

The other set of data released today showed that consumer inflation for September hardened to 4.41% as prices of pulses and vegetables rose.

Industrial output, measured in terms of the Index of Industrial Production (IIP), was at 4.1% in the April-August period against 3% in the year-ago period, the data released by the Central Statistics Office (CSO) today showed.

The index grew at 8.4% in October, 2012. After that, it has touched the highest level of 6.4% in August.

Devendra Kumar Pant, chief economist, India Ratings & Research, said the August IIP growth at 6.4% came much higher than expectations, which is highest since October 2012.

He added that IIP growth was led by capital goods and consumer durables. While capital goods production points towards a nascent investment recovery, the sharp fall in inflation and monetary easing has increased demand for consumer durables. This is partially due to initiation of festival season, he added.

Industry said manufacturing has started to turnaround. “The growth in manufacturing seems to be accelerating and we are hopeful of higher growth in the coming months. With the growth in manufacturing getting broad-based now and capital goods also posting a healthy growth for the first five months, government’s efforts to revive manufacturing has started yielding results,” said Didar Singh, secretary-general, Ficci.

Industry body Assocham said finally the green shoots of economic activity are getting converted into strong industrial growth figures.

Positive momentum in IIP growth is inspiring and we expect improved industrial activity in the coming months too, said Alok B Shriram, president, PHD Chamber.

Decline in the prices of raw materials vis-à-vis international commodity prices and rejuvenating domestic economic activity will help industrial sector to perform better, going forward, he said.

Aditi Nayar, senior economist, ICRA, said the uptick in CPI inflation in September 2015 was broadly along expected lines, reflecting the waning of the favourable base effect and hardening prices of pulses and vegetables.