A day after official data showed exports growth is at a six-month high, good news came on the factory output front. Raising hopes of an upturn, industrial production grew at 3.4 per cent in April, according to official data released on Thursday. Factory output had contracted in the previous two months. The bounce-back came on the back of recovery in output of manufacturing, mining and electricity production and capital goods.
Factory output had started to decline in October, when IIP (index of industrial production) contracted 1.2 per cent, and the trend continued till December. Growth became positive for the month of January before decelerating into negative territory again in February.
In April 2013, IIP had shown growth of 1.5 percent.
The latest data will cheer the Modi Government which is looking to revive the jobs-creating manufacturing sector. Manufacturing, which constitutes over 75 per cent of the index, grew 2.6 per cent in April against 1.8 per cent in the same month last year.
The business sentiment seemed to have improved during the month, with production of capital goods growing 15.7 per cent against a contraction of 0.3 per cent in April 2013. The mining sector grew 1.2 per cent against a 3.4 per cent contraction in April 2013. Power generation increased 11.9 per cent against 4.2 per cent in the same month of 2013.
Consumer sentiment, however, continued to remain subdued. Consumer goods output shrunk 5.1 per cent in April against 1.7 per cent growth a year ago. Consumer durables too contracted 7.6 per cent, though the decline was lower than the 9.6 per cent dip in April 2013.
The production of consumer non-durables also declined by 3.3 per cent, against a growth of 11.3 per cent in April last year.
The Electrical Machinery and Apparatus sector showed the sharpest positive growth (66.0 per cent), followed by Machinery and Equipment (9.6 per cent) and Tobacco products (9.1 percent), the official release said. The steepest negative growth was recorded by Radio, TV and Communication Equipment (-31.6 per cent), followed by Wearing Apparel, Dressing and Dyeing of Fur (-22.1 per cent), and Motor Vehicles, Trailers and Semi-trailers (-14.6 per cent).
Commenting on IIP data for April 2014, Confederation of Indian Industry Director General Chandrajit Banerjee said, “The return of industrial growth to the positive terrain is noteworthy and has rekindled the hope of industrial recovery which is critical to lift the economy and mark a return to the path of growth”. “What is encouraging is that all the three major segments of industry viz. mining, manufacturing and electricity have posted positive growth…. The double digit growth of capital goods could mark a beginning of an upturn in investments backed by an improvement in business sentiments and fast clearances of stalled projects.”