A rebound in the manufacturing sector, albeit on a low base, helped industrial output surge 15.1% in February, the third month of high growth in a row, but a tad lower than the 16.7% growth seen a month earlier. Economists say though February output fell below expectations it still pointed to a robust, broad-based economic recovery.
Figures released by the ministry of statistics and programme implementation on Monday said manufacturing output grew 16% in February compared with 0.2% in the same month a year earlier. Power generation grew 6.7% versus 0.7% a year ago, while mining output rose 12.2% from a fall of 0.2% a year earlier.
HDFC Bank chief economist Abheek Barua said the data indicates a ?robust and broad-based growth across sectors.? The continued momentum in capital goods, which grew 44.4% in February against 11.8% a year earlier, shows that investment-led recovery is on its way, Barua said. Capital goods output grew at a record 55.35% in January.
Monday?s IIP (index of industrial production) data has kept alive expectations that the Reserve Bank of India would raise key interest rates by 25-basis points in its policy review on April 20. The central bank had raised rates last month.
According to the use-based classification of industrial output, growth in consumer durables, which was hit by the global economic slowdown, rose 29.9% in February compared with 6% a year ago. Consumer non-durables grew by 2.3% in February against a fall in output of 3.4% same time last year.
In the April-February period of 2009-10, industrial output went up by 10.1%, against a poor 3% growth in the eleven months of the previous fiscal. Kotak Mahindra Bank chief economist Indranil Pan said though production in February was below expectations, there is no ?significant worry? about the economy. He said factory production is showing stability, but the 15% -plus growth cannot sustain in the medium term. Production is likely to decline by the end of the current fiscal, he said.Pan forecast an 8.5% growth in the economy in the fourth quarter, which would take growth in the full fiscal 2009-10 to about 7.2-7.3%. Economy had grown at 6.1%, 7.9% and 6% in the first three quarters. Last month, Prime Minister Manmohan Singh?s Economic Advisory Council had projected a 7.2%?plus growth in 2009-10 on the back of robust industrial expansion, services growth and less-than expected contraction in the agriculture sector. It also projected that the economy would return to the 9% growth rate in the next two years.