In a distinct sign of industrial recovery, factory output grew by 6.8 per cent in July this year, a markedly faster pace as compared to the 6.4 per cent increase witnessed in the same month a year ago.
Coming as it did — for the second month in a row — on the back of a robust 8.2 per cent growth in industrial production in June, following an upward revision from the earlier provisional estimate of 7.8 per cent, a sustained upward trend could well cushion a likely fall in farm output owing to the adverse impact of a deficient monsoon and thereby help in overall economic growth.
However, there is as yet no unanimity over whether the high growth trend in industrial output will continue during the second and third quarters of the current fiscal. For, while one view is that the revival in industry — witnessed for the first time in June ever since the global financial crisis deepened from mid-September last year — is likely to continue, many others feel that in the absence of a significant pick-up in credit offtake coupled with a fall in farm production, it would be difficult to sustain high growth.
According to the official data on the index of industrial production (IIP) released here on Friday, the manufacturing sector, which accounts for nearly 80 per cent of the IIP, fared reasonably well to notch up a growth of 6.8 per cent in July as compared to 6.9 per cent achieved in July last year. Mining, however, grew by a steep 9.9 per cent during the month as compared to a mere 2.8 per cent while the increase in electricity generation was 4.2 per cent as against 4.5 per cent in July 2008.
For the first four months (April-July) this fiscal, industrial growth improved to 4.6 per cent, though lower as compared to 5.6 per cent in the same period a year ago, mainly on account of the improved performance during June and July this year.
The IIP data reveal that industrial growth during July this year has been quite wide-ranging as except cotton textiles and jute fibre, all other groups posted positive growth. In the manufacturing sector, consumer durables which had witnessed negative growth for quite some time put up a good show and posted a huge growth of 19.8 per cent in July on the back of a high base of 13.9 per cent a year ago. As for consumer non-durable goods production, the segment grew by five per cent as against 3.4 per cent a year ago. However, for the first four months, it witnessed a negative growth of 2.6 per cent owing to the dismal performance in earlier months. The negative aspect in the IIP data is that the capital goods segment also fared poorly and clocked a growth of merely two per cent during the month as compared to a robust 17.9 per cent in July 2008.