India's industrial output rises 2.7 per cent in August

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Reversing the trend of contraction, India's industrial production grew 2.7 per cent in August, led by a rebound in manufacturing activities, government data showed Friday.

Factory output, measured in terms of the index of industrial production (IIP), had contracted 0.18 per cent in July and 1.8 per cent in June largely due to slump in the manufacturing sector.

According to data released by the Central Statistical Office (CSO), the manufacturing output, which has a 75.5 per cent weight in the index, grew 2.9 per cent from a year earlier in August, after falling 0.2 per cent in July.

C. Rangarajan, chairman of Prime Minister's Economic Advisory Council, said the monthly data indicated a turnaround in manufacturing.

"The IIP numbers indicate there is some turnaround as far as manufacturing sector is concerned. I do expect in coming months the growth rate will further pick up and for the year as a whole we can still see manufacturing growth at three to four per cent," he said.

Rangarajan said the economic reforms measures announced by the government would show its impact on the industrial growth numbers in the coming months.

The mining sector registered a 2 per cent growth during the month under review as against a contraction of 0.7 per cent in July.

However, the performance of electricity sector was not that encouraging as the output fell 1.9 per cent in August as compared to 2.8 per cent registered in the previous month.

Reacting on the monthly data, R.V. Kanoria, president, Federation of Indian Chambers of Commerce and Industry (FICCI), said the latest data indicated that the industrial growth had bottomed out in July.

"Recent government's initiatives and announcements have resulted in improved policy framework for the business and it is possible to achieve higher industrial growth by keeping up this momentum of reforms," Kanoria said.

Growth was also witnessed in basic goods (1.5 per cent), consumer durables (1.4 per cent) and consumer non-durables (0.1 per cent). In all, 13 of the 22 industry groups in the manufacturing sector showed positive growth in August.

According to the CSO, telephone instruments, antibiotics, carbon steel, conductor, aluminium, air conditioner, tea, boilers, plastic manufacturing machinery and aerated waters and soft drinks industries grew at a brisk pace.

Industry lobby CII called for rate cuts by the central bank to boost the industrial activities further.

"While the recently announced reform measures have revived business confidence to some extent, what is required now is a commensurate action from the RBI with a cut in repo rate," said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).