India’s industrial output rose at the fastest pace in five years in October, bolstered by a long-awaited expansion in the manufacturing sector and consumer goods output, showed official data released on Friday.
The Index of Industrial Production (IIP) grew 9.8 per cent in November from a year earlier, close to the highest forecast of 9.9 per cent by a recent VCCircle survey but missing VCCircle median of 6.75 per cent on the basis of inputs from 17 economists.
The growth numbers were also in contrast to the growth in the infrastructure index which showed a growth rate of 3.2 per cent, same as in September. The index of eight core industries constitutes 38 per cent of the IIP.
All three major sectors in IIP—mining, manufacturing and electricity—rose in October. While output in electricity was lower than the 11.4 per cent recorded last month, mining grew at a 16-month high, while manufacturing activity increased 10.6 per cent to a 52-month high.
In terms of sectors, 17 of the 22 industry groups in the manufacturing sector recorded growth during the month, reflecting a broad-based recovery.
While capital goods sector showed some momentum after growing at 10.3 per cent in September, the growth in the sector at 16.1 per cent was still lower than the 21.8 per cent in August. Intermediate goods output rose to a 3-year high of 6.7 per cent.
On the other hand, consumer goods output witnessed a stellar growth as consumer durables grew by 42 per cent reaching a 69-month high.
While the numbers on industrial growth are certainly a welcoming news for the government and indicate a recovery in the investment cycle, the poor performance of the Purchasing Managers Index (PMI) shows demand slumping in November. The business activity index released by Nikkei a fortnight ago highlighted a movement towards contraction, pulled down by manufacturing activity which touched a 25-month low.