Hopes of economic recovery have sprung anew with India's factory output growing 2.7% in August, up from a contraction of 0.2% in July. With the busy season kicking in, analysts said these could well be little green shoots of recovery to push growth across the economy.
"Rebound in consumer goods production growth to 5.0% from 0.5% in July was the main reason for the upside surprise," said Sonal Varma of broking and research firm Nomura.
This was led by higher production of both consumer durable and non-durables goods. Capital goods production, a measure of investment demand, however, continued to contract at 1.7%, though at a slower pace than July's 4.5% contraction, factory output data given by the index of industrial production (IIP) released on Friday showed.
Basic goods output, mainly comprising the infrastructure sector, rose at a faster pace of 2.8% against 1% in July.
"IIP numbers do indicate some turnaround in manufacturing. I expect that in the coming months the growth rate will further pick up, and, for the whole year, we can see manufacturing growth at 3-4%," said C Rangarajan, chairman of the Prime Minister's economic advisory council.