Industrial growth surged to double digits with the Centre Statistical Organisation (CSO) releasing figures for August. The general index stood at 292.3, which is 10.4 per cent higher as compared to the level in the corresponding month last year.
Following the smart recovery in August, the cumulative rise for the first five months this fiscal edged up to 5.8 per cent. With this, hopes are being raised of industrial production witnessing still higher growth rates during the remaining months of 2009-10 which might make up for the anticipated loss in farm production and have a positive impact on the country’s overall economic growth.
In fact, enthused by the industrial growth during the month, the Prime Minister’s Economic Advisory Council (PMEAC) has projected an IIP growth of 7.5-8 per cent this fiscal. “I think the industrial production numbers clearly indicate that industrial recovery is well on the way. I would expect that during the current financial year, the industrial growth would be 7.5 per cent to eight per cent. GDP growth will be 6.0-6.5 per cent,” PMEAC Chairman C. Rangarajan said.
Low base effect
Even statistically, industrial growth is likely to be higher in the remaining months owing to the low base effect as the factory growth had slumped markedly during the second half of last fiscal on account of the global slowdown.
Dubbing the sharp turnaround in industrial production as a recovery process from the domestic slowdown witnessed earlier as a fall-out of the global meltdown, Finance Minister Pranab Mukherjee said: “It is a good sign and it is a recovery, process of recovery… We are hoping that when the final figures of second quarter will be available, perhaps there will be some higher growth. If the higher growth projection is there, then in the third quarter, fourth quarter we can make up.”
Echoing similar views, Finance Secretary Ashok Chawla noted that the growth in industrial production was likely to be higher in the coming months.
“We expect the trend to continue and expect better numbers in September,” he said.
While the apex chambers hailed the IIP numbers as a definite sign of recovery, the healthy industrial performance also brought cheer in the bourses.
buying spree in the Bombay Stock Exchange (BSE) led the Sensex to soar by 384 points to 17026.67 at the day’s closing while the National Stock Exchange’s Nifty also jumped by 109 points to 5054.25.
Industrial production for July was revised upwards to 7.2 per cent from 6.8 per cent estimated earlier.
India Inc said the double-digit growth in industrial production in August showed robust economic recovery but asked the government and the RBI to continue the stimulus measures to sustain the uptrend.
Several fiscal and monetary incentives since December 2008 helped the industry to recover into a growth trajectory.