India’s factory output grew by 5% in February — the highest in nine months — rekindling hopes of an industrial rebound buoyed by a robust manufacturing sector, latest data released on Friday showed.
Factory output had contracted by 2% a year-ago It grew by 2.8% in January this year.
Capital goods output, a broad gauge to measure investment activity, grew by 8.8% in February, compared to a contraction of 17.6% in the year-ago period, in what could be signs that companies are adding new capacities.
Manufacturing, which constitutes over 75% of the index of industrial production (IIP), grew by 5.2% in February, compared to a 3.9% fall in output a year-ago.
Finance minister Arun Jaitley, in his maiden full budget in February, had announced a raft of measures, including capital support and tax breaks for small industries, amid hopes that these would breathe life into the waning industrial sector and spin jobs.
Household spending showed signs of revival with consumer durables output inching towards the positive territory (-3.4%) in February compared to a contraction of 9.8% in the year-ago period.
“Mining and manufacturing sectors appear to have picked up pace. This is reflective of policy actions in terms of faster clearances of projects. The pickup in manufacturing activity is also suggestive of rising demand,” Care Ratings said in a report.
Many banks have cut lending rates in last two days, paving the way for cheaper borrowing costs for companies and households.