13.2.10

Industrial output grows 16.8%




India’s industrial output grew at its fastest pace in over a decade at 16.8% in December, signalling a strong recovery but also sparking apprehensions that the government may take cues from the RBI and start winding down some of the stimulus measures in the Budget. The manufacturing sector, which constitutes around 80% of the factory output, expanded by 18.5% to set the pace of growth. As a pointer to rising domestic consumption strengthening future growth, consumer durables industries, like auto, surged 46% and capital goods output rose by 38.8%. The latest numbers are much higher than a revised annual rise of 11.8% in November as well as forecasts of around 12%. It is the highest reading in the index of industrial production since April 1995, when the series, which uses 1993-94 as base year, started. Besides manufacturing, mining output grew by 9.5% against 2.2% a year ago, while electricity generation rose by 5.4% against 1.6% in the previous corresponding period. The PM’s Economic Advisory Council chairman and former RBI governor C Rangarajan said the strong numbers are likely to set off fiscal consolidation with thewithdrawal of some of the stimulus measures. This is making industry nervous as the recovery is not yet broad-based.

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