ndustrial production grew at 4.7 per cent in May, a 19-month high, according to official data released here on Friday. The growth is mainly on the back of recovery in the output of manufacturing, mining and electricity production and capital goods.
The output, as measured by the Index of Industrial Production (IIP), had contracted by 2.5 per cent in the same month last year. The IIP’s previous high was recorded in October 2012 at 8.4 per cent.
During April-May, the IIP recorded a growth of 4 per cent against a contraction of 0.5 per cent in the first two months of last fiscal.
Manufacturing, which constitutes over 75 per cent of the index, grew 4.8 per cent in May against 3.2 per cent decline in output a year ago. Production of capital goods grew by 4.5 per cent against a contraction of 3.7 per cent.
The mining sector grew by 2.7 per cent as against a dip of 5.9 per cent a year ago, while power generation increased by 6.3 per cent against 6.2 per cent growth in May 2013.
Overall, 16 of the 22 industry groups in manufacturing showed positive growth in May.
According to the IIP data, output of consumer goods grew by 3.7 per cent in May compared to the contraction of 6.6 per cent a year ago. The consumer durables segment grew by 3.2 per cent against a decline of 18.3 per cent in the year-ago period.
Production of consumer non-durables also grew by 3.9 per cent in May.
Commenting on the IIP figures, Chandrajit Banerjee, Director-General, CII, said the rise in industrial production for the second month in a row provides a glimmer of hope that the economy could be bottoming out and recovery could be on the anvil.
“No doubt, the favourable base effect of last year and the double digit export growth experienced during the month could have also contributed in boosting industrial activity during the month, but the overall trend is positive,” he added.
Similarly, Care Ratings said IIP had shown two successive growth rates of 3.4 per cent and 4.7 per cent, respectively in April and May…However, these numbers should be viewed with caution as they come over a low base effect with several segments witnessing positive growth in this period over negative rates last year.
Signs of recovery PTI reports:
India Inc on Friday said the sharp rise in industrial output in May is a sign that the economy is on the road to recovery and expects the rebound to sustain on the back of policy measures unveiled in the maiden budget of the Narendra Modi-led government.
“Rise in industrial production for the second month in a row provides a glimmer of hope that the economy could be bottoming out and recovery could be on the anvil. Going forward, we anticipate a rebound in industrial production as the reform—oriented and forward looking Budget would boost business confidence leading to turnaround of the investment cycle,” CII Director General Chandrajit Banerjee said.
“As growth is subdued in intermediate sector and capital goods growth also comes on a negative base, the manufacturing sector may take some more time to recover. We are hopeful that the measures announced in the budget would help the sector to revive fast,” FICCI President Sidharth Birla said.
Terming the rise in industrial output as a “good sign”, Assocham President Rana Kapoor said: “I hope the trend continues. It will help GDP grow above 5.5 per cent in the current fiscal. However, monsoon can be a dampener.”
Overall, 16 of the 22 industry groups in manufacturing showed positive growth in May.
