The country’s industrial output grew by 16.7 per cent year-on-year in January, brightening prospects of a return to the heady days of high overall growth with companies expected to expand factory capacities to meet higher demand.
The manufacturing sector, which accounts for about 80 per cent of the weightage in the index of industrial production (IIP), saw output grow by 17.9 per cent, Central Statistical Organisation (CSO) data showed on Friday.
Capital goods production —signifying machinery — which is a lead indicator of investment activity, rose a scorching 56.2 per cent in January, after a very strong 39.1 per cent recorded last month.
With growth prospects brightening and a fiscal crunch looming, finance minister Pranab Mukherjee in his budget speech last month signalled a partial withdrawal of the stimulus package announced in the previous year to counter the economic downturn.
Mukherjee said the India’s gross domestic product (GDP) will grow by 7.2 per cent in 2009-10, in line with the advance estimates of CSO.
“Signal is quite clear and it is encouraging. I do hope it will be possible for us to achieve the growth (rate) which has been projected by the advance estimate of CSO,” he said, adding that he expected manufacturing to power higher GDP growth on the back of two consecutive high-growth months.
{{/usCountry}}“Signal is quite clear and it is encouraging. I do hope it will be possible for us to achieve the growth (rate) which has been projected by the advance estimate of CSO,” he said, adding that he expected manufacturing to power higher GDP growth on the back of two consecutive high-growth months.
{{/usCountry}}Analysts are optimistic.
“The strong performance of the manufacturing sector harbours the potential to spread to the rest of the industrial economy”, said Amit Mitra, secretary general of industry body Ficci.
“We remain optimistic on the growth outlook in India. We expect GDP growth to reach 9 per cent in 2010-11,” said Sonal Varma of Nomura Financial Advisory.