Diwali Bonanza: August IPP Up at 10.4%; Production Likely to Rise

Helped by a base effect and a revival in the economy, industrial output growth rose to 10.4 per cent from a revised 7.2 per cent growth in July. Thus, the August numbers have pushed the April-August output growth to 5.8 per cent.

In August, the manufacturing sector growth was at 10.2 per cent in comparison to 1.7 per cent a year ago. While the output in mining sector hiked to 12.9 per cent on a year-on-year basis. The capital sector recorded a growth at 8.3 per cent while the basic goods sectors grew by 10 per cent.

Ajay Shah, a professor at NIPFP, said that an improvement in exports and higher industrial production after a rundown in the inventory have helped to push IIP higher. Despite the double-digit growth in IIP he remains cautious. This does not signify that we are back at a sustained higher growth trajectory but a revival from the bottom, he added.

Union Finance Minister Pranab Mukherjee described it as a recovery process from the earlier slowdown caused by the global financial crisis and said that possibly there could be some higher growth projection.

“It is a good sign and it is a recovery, process of recovery,” Mukherjee said.

“We are hoping that when the final figure of second quarter will be available, perhaps there will be some higher growth. If the higher growth projection is there, then in the third quarter, fourth quarter we can make up,” he said.

Finance Secretary Ashok Chawla said that there is a possibility of industrial production to move up.

“We expect the trend to continue and expect better numbers in September,” Chawla said.