Last Thursday, the Central Statistical Organisation released industrial output figures for October which showed manufacturing growth at 6.4 per cent. In the second quarter (July-September), manufacturing had grown by 6.8 per cent. While October numbers were a trifle below this trend, revisions and stronger growth in November and December should keep third quarter (October-December) growth on par with that of the second. Industrial growth of over 6 per cent is welcome relief after the tepid performance of recent years, but it bears emphasis that 1999-2000 had experienced an even stronger upsurge, only to peter away subsequent ly. So, the question must be asked ? will this growth sustain, or will the next year see a return to anaemia in industry?

There is a modicum of good news in the pattern of industrial growth this year. If we compare the first eight months of this fiscal to 1999-2000, the last year with decent growth, there is evidence that the expansion of industrial output is more evenly spread out this year. Of the 17 two-digit categories in which manufacturing enterprises are classified, this year as many as nine categories registered growth exceeding the mean value for all manufacturing industries; in 1999-2000, this number was smaller at six. Near the bottom, this year only four categories had growth less than one-third the manufacturing mean, while in 1999-2000 the number was higher at six.

The same story is revealed by the fact that the 25 percentile of the distribution of two-digit growth this year was 3.2 per cent, while in 1999-2000 it was -0.9 per cent. The coefficient of variation of the 17 category-wise growth rates is 89 per cent this year, compared to 131 per cent in 1999-2000. In fact, this has been so far the tightest distribution since 1996-97, the last year of the halcyon days.

So which were the industry groups contributing to growth this year? Food and beverages together contributed 1.5 percentage points (ppts); basic chemicals gave 1 ppt; metals and alloys 0.5 ppt; transport equipment and apparel 0.5 and 0.4 ppt respectively; refinery products and cement 0.2 ppt each and metal products another 0.2 ppt. In 1999-2000, just three categories ? chemicals, machinery and cement ? contributed as much as 4.2 ppts of growth.

The point of all these tedious numbers is that the pattern of growth in Indian manufacturing this year tends to an, albeit, tentative conclusion that the recovery this time might be more than transient. For one, manufacturing growth has been steadily on the rise, beginning in the last quarter of 2001-02. Second, while some of the growth can be clearly linked to good export performance, e.g. apparel, most of the two-digit categories showing buoyancy are linked to domestic demand ? food, beverages and cement, for instance. Third, double-digit export growth in the first two quarters of 2002-03 has continued into October, which is particularly encouraging given depressed conditions in the world today. It needs remembering that 1999-2000, which also experienced strong export growth, came at the fag end of the boom years.

Fourth, the big movement in non-durable consumer goods is noteworthy ? specially considering that we have had solid five successive quarters of strong growth since the autumn of 2001. And growth of 14 per cent for 2002-03 up to October has the flavour of 1996. Big time consumer non-durable growth indicates solid movement in personal consumption demand for manufactures, which implies improvement in both current incomes and expectations.

The improvement in the climate of lending, attendant on the passage into law of the Securitisation Bill and better operating efficiency of banks, combined with five years of extensive corporate restructuring, and possible gains in competitiveness evidenced by the strong export growth in tight international markets, are auguries perhaps. Indications that the economy might be poised for another round of higher growth. This potential will realise itself. But the extent to which it does is contingent on imaginative policy making ? one inspired by efficiency, not prevarication and capitulation to vested interests.

The author is economic advisor to ICRA (Investment Information and Credit Rating Agency)