In a development that should please India Inc, official data on factory output for April showed a 4.1 percent growth, against 2.1 percent for the month before but retail inflation also inched up to 5.01 percent in May due to higher food prices.
The retail, or the consumer price indexed (CPI) inflation, in the corresponding month of 2014 was at 8.33 percent, the Central Statistics Office (CSO) data showed.
The CPI-urban for May stood at 4.41 percent and rural at 5.52 percent.
May's food inflation stood at 4.8 percent from the previous month's rate of 5.11 percent.
In this connection, the Reserve Bank of India, last week, reduced its repo rate, that is the rate at which it lends to commercial banks, from 7.5 percent to 7.25 percent.
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Giving reasons for the monetary policy stance, RBI Governor Raghuram Rajan said plans for lower food output needed to be in place, global financial markets were volatile, factory output was recovering unevenly, services sector was emitting mixed signals, fuel inflation was up, exports were down and liquidity had improved.
Even as retail inflation came in line with the equities markets and the industry's expectations, it was the factory output that surprised many.
An uptick in manufacturing pushed up India's factory output to 4.1 percent in April, against 2.1 percent in the month before.
Further, among the six sectoral indices, capital goods expanded by 11.1 percent.
The factory output had grown at a slower pace of 2.1 percent in March from 5 percent in February. The factory output had stood at 3.7 percent in April, 2014.
According to the CSO data on the Index of Industrial Production (IIP), the healthy growth in the factory output for April was attributed to an uptick in the manufacturing sector.
The manufacturing sector, which has the maximum weightage in the IIP, grew by 5.1 percent in the month under review from 2.2 percent in March.
For the other two major sub-indices of the IIP, the CSO data showed that the index for the mining sector inched up by 0.6 percent against 0.9 percent in March, while that for electricity segment was down 0.5 percent in April, against a growth of 2 percent in the month before.
The three sub-indices of the IIP namely manufacturing, mining and electricity, had registered a growth of 3 percent, 1.7 percent and 11.9 percent in April, 2014 respectively.
Friday's data also showed that among the six use-based classifications of the index, the output of capital goods expanded by 11.1 percent. The capital goods segment is a key indicator of economic activity.
Consumer non-durables, intermediate goods, consumer goods and basic goods also posted a healthy performance. These sectors grew by 4.4 percent, 3.3 percent, 3.1 percent and 2.8 percent respectively.
The consumer durables segment expanded by just 1.3 percent in April.
Even though both the macro economic data were released after the close of equities markets, still it had an affect on investor sentiment which turned anxious leading to subdued trading.
The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), closed a volatile session up only 54 points or 0.21 percent on Friday.
The anxiety over inflation and factory output data, had dented investor sentiments even on Thursday and led the Sensex to plunge nearly 470 points.
Terming the April 2015 figures encouraging, industry body Assocham said it is pleased to finally see the green shoots of economic activity getting converted into growth figures for industry.
"IIP numbers seem to be healthy and encouraging and seem to provide stem to the underlying growth momentum as the industrial activity is showing signs of revival as indicated by the 4.1 percent growth seen in April 2015 over the corresponding month of 2014," said Rana Kapoor, president of The Associated Chambers of Commerce and Industry of India.
"The manufacturing sector seems to have recorded a better growth rate of 5.1 percent as compared to the 3.0 percent seen in April 2014, he added.
Jyotsna Suri, president of industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci) said: "The manufacturing growth seems to be gaining momentum now as is evident from the healthy growth of key sectors like capital goods and also from the fact that growth is more diversified."
"Government has taken several steps in the last few months to improve the business environment and enhance the investor confidence which is now going to yield results," she added.
