Hopes of a strong economic rebound sprang anew on Friday as India’s industrial output showed 1.4 per cent growth in April, up from a 0.75 per cent contraction a month earlier.
China, the world’s third-largest economy, seems to be on the slow road to recovery from recession. It recorded a better-than-expected 8.9 per cent growth in industrial production during May.
The data set the ground for a broader economic revival ahead of the Union Budget next month as manufacturing — the biggest drag in a year of slowdown — showed signs of rejoining the high growth party.
The sector accounts for 80 per cent of the overall industrial output and rebounded to grow by 0.7 per cent compared with a contraction of 1.65 per cent March.
But the real turnaround lay in the consumer durables sector.
It grew by 16.9 per cent, reflecting a rise in consumer demand and spending on goods such as televisions and refrigerators.
The latest data is a beacon of hope for the new government that is groping for options to sustain growth amid the worst slowdown in the past 80 years.
“The signs of recovery are there,” Suresh Tendulkar, chairperson of the Prime Minister’s Economic Advisory Council, told reporters.
“The worst is over, that is what I have been saying. The worst is over for the economy,” he added.
Venugopal Dhoot, chairman of Videocon group, echoed the same view.
In the interim budget, the sector had got Rs 34,000 crore.
The allocation for higher education would go up from last year’s Rs 11,340 crore to Rs 21,679 crore. The HRD ministry will also get Rs 7,000 crore more for setting up model schools and colleges in educationally backward areas and the expansion of the Sarva Siksha Abhiyan to the upper primary level.
“The proposed increases could mean a jump in fiscal deficit by 1 per cent,” said a senior government official. The interim budget had projected a fiscal deficit of 5.5 per cent.
Saumitra Chaudhuri, a Planning Commission member, said the fiscal deficit could be managed if government could generate resources through disinvestments. “Our revenue generation should improve with the economy showing signs of revival,” he said.
To give a boost to low-cost housing and modern public transport systems such as the Metro in urban areas, the government is set to increase the budget of the urban development ministry by about 80 per cent. The interim budget had allocated Rs 4,724 crore for the ministry. Allocations are likely to be increased for rural development and power.
Delhi will get Rs 2,000 crore for Commonwealth Games 2010 — up from the Rs 500 crore promised in the interim budget.