Factory output revives to rise by 2.7 per cent in May

Factory output revives to rise by 2.7 per cent in May

 However, economists warned that monsoon could play truant. Already processed food production is down 14.7 per cent in May and 27.2 per cent in the first two months of this fiscal.

Though industrial growth in May was down from 4.4 per cent a year ago, it was quite encouraging as it was more than double the 1.2 per cent in April, when growth turned positive after being in negative territory almost every month since October 2008.
For the first two months of this fiscal, industrial growth was 1.9 per cent compared to 5.3 per cent a year ago.

Positive signs

“The IIP is showing a further improvement... this is what we were expecting for some time now. Except for capital goods and non-consumer durables, the rest are certainly looking much better. I think we are back on track as was expected,” Finance Secretary Ashok Chawla said. Others also said the worst in terms of slow growth is over.

“I have been saying and others are saying that the worst is over. The real question is how rapidly we will resume growth,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

Consumer durable goods, a crucial sector that was showing decline over many months, posted expansion. “It is better mainly due to government spending, boost from the election and 6th Pay Commission,” Crisil Principal Economist D K Joshi said. He however added that the situation on the food front could get worse as Joshi said, “Going forward the monsoon can be a dampener.”

Besides, production in as many as eight sectors, including cotton textiles, jute, and metal products, declined. In broad sector terms, manufacturing, which constitutes around 80 per cent in IIP, grew by 2.5 per cent, mining by 3.7 per cent and electricity generation by 2.7 per cent. Sub-sectors like consumer non-durables and capital goods posted declined in May.

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