Industrial output rises to 3-yr high of 6.4 pc in August, shows recovery signs
New Delhi: Showing signs of recovery, industrial output rose to nearly 3-year high of 6.4 per cent in August on improvement in manufacturing and capital goods while retail inflation remained with in comfort zone.
The manufacturing sector, which constitutes over 75 per cent of the index, grew by 6.9 per cent in August, while the capital goods output rose by 21.8 per cent in the month indicating a recovery.
Commenting on the twin macro economic data, Chief Economic Advisor Arvind Subramanian said, "Encouraging news on Indian economy. IIP growth increased to 6.4 per cent, consistent with indirect tax revenue performance. Core inflation moderate."
The previous high of factory output growth was recorded in October 2012 at 8.4 per cent. The factory output had grown by 0.5 per cent in August last year.
Industrial output, measured in terms of the Index of Industrial Production (IIP), was at 4.1 per cent in the April-August period against 3 per cent in the year-ago period, the data released by the Central Statistics Office (CSO) today showed.
As regard retail inflation, the Consumer Price Index rose to 4.41 per cent in September from 3.74 per cent in August this year but remained in comfort zone. RBI has projected 5.8 per cent retail inflation by January, 2016.
"The growth in manufacturing seems to be accelerating and we are hopeful of higher growth in the coming months.. Government's efforts to revive manufacturing has started yielding results," said FICCI Secretary General A Didar Singh.
Chief Economist, India Ratings & Research Devendra Kumar Pant said, "Sharp fall in inflation and monetary easing has increased demand for consumer durable. This is partially due to initiation of festival season. Bond market is likely to respond favourably to IIP data and bond yields are likely to fall by around 5 basis points in tomorrow's trade."
Meanwhile, the IIP growth for July has been revised slightly downwards to 4.1 per cent from provisional estimate of 4.2 per cent last month.
Commenting on the data, Assocham President Rana Kapoor said, "..pleased to see finally the green shoots of economic activity getting converted into strong industrial growth figures."
"On the whole, these estimates put forward certain positive indications of growth revival, however, the policy makers need to continue with the proactive stance to support these developments," he added.
According to IIP data, the manufacturing sector, which constitutes over 75 per cent of the index, grew by 6.9 per cent in August, 2015 against a contraction of 1.1 per cent in the same month last year.
The output of capital goods, a barometer of investment, grew at an impressive rate of 21.8 per cent as against a contraction of 10 per cent in the same month last year.
The mining sector growth was at 3.8 per cent in August against 1.2 per cent in the same month last fiscal.
However, power generation growth slowed to 5.6 per cent in August as compared to 12.9 per cent in the same month a year ago.
The overall consumer goods output grew by 6.8 per cent in August as compared to a contraction of 6.2 per cent in the same month a year ago.
The consumer durables goods output grew at 17 per cent in August as compared to a contraction of 15 per cent in the same month a year ago.
The consumer non-durable goods output grew by 0.4 per cent in August as compared to 0.4 per cent growth in the same month a year ago.
The basic goods output grew by 3.4 per cent in August, compared to 9 per cent growth a year ago, whereas intermediate goods output grew by 2.6 per cent in the month as compared to a contraction of 0.1 per cent in the same period last year.
In terms of industries, 15 out of 22 groups in the manufacturing sector showed positive growth in August.