India's eight core infrastructure industries grew by a robust 6.8% in November, rekindling hopes of an industrial rebound, in signs of good news for a government hit by corruption scandals and sagging political stock.
Buoyed by strong output numbers in coal, cement, electricity and refinery products, the eight infrastructure industries, which have a combined weightage of 38% in the overall Index of Industrial Production (IIP), bounced back reversing trend of four straight months of slowdown in November.
The output of these industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - had grown by 0.3% in October and by 4.9% in November last year.
The shortfall in coal supplies in October and the resultant slowdown in electricity generation and manufacturing had hurt overall industrial growth, which contracted by 5.1% in October, raising fears about a slowdown in the broader economy.
Economists tracking the Indian economy had sounded a note of caution and said that they would prefer to wait for November and later months' data on industrial output before concluding about a slowdown in the Indian economy.
"There is more to this data point that suggests that the decline (in October) is likely to be a one-off," said Rajeev Malik, senior economist at broking and research firm CLSA, Singapore. "Overall, the latest industrial production data needs to be digested with a bag of salt."
Indian firms are feeling increasingly squeezed by costlier credit at home, halting investment activity.
Industry groups have ratcheted up demands for a fiscal stimulus in wake of a sharp drop in investment and all eyes are on finance minister Pranab Mukherjee's budget announcements.