Mfg, Capital Goods Segments Grow, Point To Steady Economic Revival
Industrial output growth held steady in July, boosted by healthy expansion in the manufacturing, capital goods and consumer durables segments, signalling that the key sector may be on the path to revival.
Data released on Friday by the Central Statistics Office showed the index of industrial production rose 4.2% in July compared to an upwardly revised 4.4% in the previous month and 0.9% growth in the year earlier period.
While there are several positive signs in the numbers released on Friday , there are segments which still need to be monitored to help sustain the growth momentum. The strong numbers for the second successive month brought cheer to policymakers, who said the numbers display signs of an improving economy .
“The industrial produc f tion and BoP (balance of pay ments) data released today , along with the Q1 2015-16 GDP numbers point towards steady improvement in the Indian economy,“ the finance mi nistry said in a statement.
Data showed the manufacturing sector rose 4.7% in July compared to a decline of 0.3% in the same month last year, while the capital goods segment, which is a barometer of industrial activity , rose 10.6% compared to a decline of 3%.
The consumer segment also showed some signs of improvement with the durables sector rising 11.4% compared to a contraction of 20.4% in July 2014. The consumer nondurables sector remained a worry , contracting 4.6% yearon-year compared to a growth of 5.2% in July 2014.
An analysis of the data by the finance ministry said the manufacturing sector is slowly emerging as a leader of industrial growth.
Economists said the data showed some promise. “This is a good sign and does signal that growth could be in the region of 4% for the entire year, considering there is expecta tion that both investment and consumption would pick up in the second half,“ said Madan Sabnavis, chief economist at Care Ratings.
Economic affairs secretary Shaktikanta Das said the July IIP data was consistent with steady improvement in GDP numbers. Data for capital goods & manufacturing sectors are noteworthy .“First quarter CAD (current account deficit) at 1.2 % better than last year. Have to remain watchful,“ Das tweeted.
A string of recent data has pointed to green shoots of recovery in the economy and the government is confident of achieving 8% growth in the current fiscal. Sliding inflation has also triggered hopes of a reduction in interest rates. The Reserve Bank of India will review monetary policy later in the month and pressure has mounted on the central bank to cut rates and help boost growth.
