India’s industrial production grew by 2.5% in March — the fastest in five months — but the full-year growth for 2012-13 recorded a two-decade low of 1%, prompting industry leaders and analysts to caution that the worst may not be over yet.
The government immediately said the data pointed to signs of a recovery. India is struggling to claw out of a decade-low slow growth of 5% seen in 2012-13.
“We are happy to see the numbers. This is exactly the trend we are hoping. If it (the trend) continues, inflation comes down and growth begins to pick up, I am confident that growth in current fiscal would cross the 6% mark,” said Arvind Mayaram, economic affairs secretary.
The 1% growth in the index of industrial production (IIP) in 2012-13 is the lowest since the 0.6% growth recorded 1991-92.
“This will be the second or third month in which the manufacturing growth will be positive. We were for a time in the negative territory,” said C Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
{{/usCountry}}“This will be the second or third month in which the manufacturing growth will be positive. We were for a time in the negative territory,” said C Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
{{/usCountry}}Capital goods output growth remained positive for the second consecutive month, but analysts advised caution.
“A detailed look suggests that this is due to the volatile rubber-insulated cables category (up 247% y-o-y in March from 189% in February). Excluding this, the underlying trend in industrial production seems to remain weak, suggesting that the pickup ... is not broad based,” said Sonal Varma, economist at brokerage firm Nomura.