With steady improvement in gross domestic product (GDP) numbers due to good performance of manufacturing and capital goods sectors, industrial output improved reasonably at the level of 4.2 per cent in July, a slight moderation compared to 4.4 per cent in the previous month.
According to the official data released on Friday, the Index of Industrial Production (IIP) in July was a shade lower than the revised estimate of 4.36 per cent in June. “July IIP data is consistent with steady improvement in GDP numbers. The data for capital goods & manufacturing sectors are noteworthy,” Economic Affairs Secretary Shaktikanta Das posted in his tweeter account.
The IIP was at 3.5 per cent in April-July period against 3.6 per cent in the year-ago period, the Central Statistics Office (CSO) said in its release. The main contributors to the growth were manufacturing and capital goods sector.
The manufacturing sector, which constitutes over 75 per cent of the index, grew by 4.7 per cent in July 2015 against a contraction of 0.3 per cent in the same month last year. The output of capital goods, a barometer of investment, grew at an impressive rate of 10.6 per cent against a contraction of 3 per cent in the same month last year.
Commenting on the data FICCI President Jyotsna Suri said, “It is encouraging to see the positive growth in manufacturing over the last few months and we hope that this growth and demand will pick up as we are nearing the festive season. There is a potential to take this growth to a higher level with the help of more supportive policies for stimulating domestic demand and exports.”
“The Government’s efforts on multiple fronts to create an enabling environment for business are going to provide impetus to the manufacturing growth in the future” she added.
Keeping the improvement data in view, India Inc are hopeful for a rate cut as the Reserve Bank of India (RBI) is scheduled to announce next monetary policy review on September 29. Industry expects a rate cut upto 50 basis points from the central bank to provide impetus for the industrial growth.
However, Assocham President Rana Kapoor said, “With prices seemingly under control. The RBI in its upcoming bi-monthly monetary policy must give due consideration to providing further fillip to the industrial growth and probably announce at least 25 bps rate cut.”
The mining sector growth, the data said, was at 1.3 per cent in July against 0.1 per cent in the same month last fiscal. “Power generation growth slowed to 3.5 per cent in July compared to 11.4 per cent in the same month a year ago,” it said.
The consumer durables goods’ output, however expanded at 11.4 per cent in July compared to a contraction of 20.4 per cent in the month a year ago. “Overall consumer goods output rose by 1.3 per cent in July compared to a contraction of 5.9 per cent in the month a year ago. In terms of industries, 12 out of 22 groups in the manufacturing sector showed positive growth in July,” it added.