Industrial output growth rose by 6.8 per cent year-on-year in July, lower than the previous month’s upwardly revised 8.2 per cent growth, but still high enough to trigger hopes of a sustained economic revival.
Government data on Friday also revealed that manufacturing, which accounts for 80 per cent of overall industrial output, also grew by 6.8 per cent. But the real story lay in the consumer durables sector that grew by a healthy 19.8 per cent, implying that private consumer demand was reviving growth in the broader industrial horizon.
The latest data shone out as beacon hope for the new government which is groping for options to sustain growth amid the worst global economic downturn in 80 years.
Data published earlier, including that of automobile production, had already indicated industrial output would expand in July, even though exports, hit by Western recession, faltered.
But the capital goods sector remains highly volatile, indicating that investment is yet to take off on a sustained basis.
Capital goods grew by just two per cent in July against 17.9 per cent a year ago.
Finance Secretary Ashok Chawla said the growth in factory output was sustainable, and some analysts echoed the view.
“We believe that the industrial sector is clearly out of the woods and is on a firm recovery path. We expect industrial output growth to average 7 per cent in 2009-10 from 2.7 per cent in 2008-09,” said Sonal Varma of Nomura Financial Adivosry and Securities.
Industry captains said the July factory output growth figures do signal a revival.
“The figures give further evidence of a recovery in the industrial sector. The robust growth in mining and manufacturing have kept up the level of industrial growth at a reasonable level,” said Amit Mitra, secretary-general of Federation of Indian Chambers of Commerce and Industry (Ficci).