Bounce-back comes on the back ofrecovery in manufacturing
A day after official data showed exports growth at a six-month high, good news has come 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 the IIP contracted 1.2 per cent, and the trend continued till December. Growth became positive in January before decelerating into negative territory again in February.
In April, 2013, the index of industrial production (IIP) had shown growth of 1.5 per cent. 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. Power generation increased 11.9 per cent against 4.2 per cent in the same month last year.
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.
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 industry group electrical machinery and apparatus showed the sharpest positive growth of 66 per cent, followed by Machinery and equipment (9.6 per cent) and Tobacco products (9.1 per cent), the official release said. The steepest negative growth was recorded by the industry group 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).
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, namely, 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.”