Industry output on high growth curve, up 9.1 per cent

Industrial output grew by 9.1 per cent in September triggering hopes that the worst might be over for the Indian economy, reports HT Correspondent.

Industrial output grew by 9.1 per cent in September triggering hopes that the worst might be over for the Indian economy.

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Manufacturing, which accounts for 80 per cent of overall industrial output, grew by 9.3 per cent, pushing the average growth rate during first six months of the current fiscal year (April to October 2009) to 6.5 per cent data released on Thursday showed.

But the real story was in the consumer durables sector that grew by a healthy 22.2 per cent, perhaps mirroring a higher purchases of goods such as televisions and refrigerators.

A slew of recent data releases confirmed signs of rising domestic demand in India. Automobile sales have clocked robust sales since the last few months and grew by 15.6 per cent in October.

The country’s gross domestic product (GDP) for April to June quarter grew 6.1 per cent, up from 5.8 per cent in the previous quarter, but the spectre of a drought this year had muted the cheers.

The government expects the GDP to grow by about 6.5 per cent in 2009-10.

All eyes are on the GDP data for the second quarter (July to September) that would be released later this month.

Industry captains and analysts said there were strong indications of a broad-based recovery.

“Since June industrial production has been showing good growth and the latest numbers confirm that a sustained recovery is underway,” said Harshpati Singhania, president of industry association Federation of Indian Chambers of Commerce and Industry (FICCI).

The focus now is on when the government begins rolling the stimulus measures introduced to counter a downturn that hit the world last year.

On Sunday, Prime Minister Manmohan Singh had indicated that the government would take appropriate action next year to wind down the stimulus package.

Analysts said policy makers would have to carefully walk the edge to sustain growth amid strong inflationary pressures and poor agricultural output.

“There exist certain downside risks to growth such as mounting inflationary expectations and a lower agricultural growth due to deficient rainfall,” said Yashika Singh, head of economic analysis group of consulting firm Dun and Bradstreet.