Backed by a good show in consumer goods and a slight recovery in the mining sector, industrial production beat market expectations to grow by a six-month-high rate of 2.7 per cent in August, after two months of contraction.
According to the official data released on Friday, a fall in the pace of deceleration in the capital goods sector also played a major part in the overall industrial recovery. Even as the growth in August was lower than the 3.4 per cent in the month last year, given the sharp slowdown in the industrial sector in the recent months, the 2.7 per cent growth could be seen as a sign of a gradual recovery if the trend persisted, economists said.
Another set of data released by the government on Friday showed that retail-price inflation fell to a six-month low of 9.73 per cent in September. At the outset, this might be seen as leverage for the Reserve Bank of India to go for a rate cut. But economists said the rate of price rise is still high and it is too early for the central bank to go for a move like that. Data on wholesale-price inflation for September are expected on Monday.
Cumulatively, growth in factory output, as measured by the Index of Industrial Production, stood at 0.4 per cent in the first five months of this financial year, much lower than the 5.6 per cent recorded in the corresponding period last financial year.
In the month, growth in both manufacturing and mining stood at the highest level this year, at 2.9 per cent and two per cent, respectively.
In contrast, electricity generation in the month expanded at the slowest pace this year — by 1.9 per cent.
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Within manufacturing, capital goods grew at 1.7 per cent. It had contracted by 28.1 per cent in June and 21.5 per cent in April.
Except capital goods, all other categories — basic goods, intermediate goods and consumer goods — expanded.
The consumer goods sector grew by five per cent, higher than the 2.1 per cent seen in the same month last year.
Consumer durables rose four per cent, compared to 5.5 per cent a year ago; and consumer non-durables expanded by 5.8 per cent, against a contraction of 0.7 per cent in August last year.