Springing a pleasant surprise, industrial output grew at a five-year high rate of 9.8 per cent in October on impressive performance of capital and consumer goods, driven by festive demand in the build-up to Diwali, official data released on Friday revealed.
The latest IIP figure marks a rebound from 3.84 per cent growth recorded in September 2015 and a contraction of 2.7 per cent in October last year. The previous high in IIP was in October 2010 at 11.36 per cent.
As per data by the Central Statistics Office (CSO), the manufacturing sector grew 10.6 per cent year-on-year in October. The consumer durables segment grew at 42.2 per cent in October over the same month last year, the highest since December 2009. The consumer goods category paced up at 18.4 per cent, sharpest rise since January 2010.
At 4.7 per cent, consumer non-durables growth too hit its highest since February this year. Even the usually volatile capital goods segment, a gauge for fixed corporate investment, has witnessed growth in 11 out of 12 months through October, suggesting enhanced government spending was starting to have an impact.
Experts, however, desisted from hinting at a major turnaround, with some economists even expecting a slowdown in industrial output in November when favourable base effect and festive demand wane.
Still, the fact that the IIP grew a modest 4.8 per cent during the April-October period, compared with 2.2 per cent a year before, prompted some to reckon a nascent recovery is underway. This is also corroborated by a 67 per cent jump in the excise duty collection, which is robust even after stripping off the additional revenue enhancing measures, including an increase in the duty rates.
Meanwhile, terming the 9.8 per cent growth in industrial production in October as “very good”, CEA Arvind Subramanian said one has to be careful while interpreting the data as the spike could be on account of Diwali purchases. “The latest October IIP is very good. It’s a high number, good number and encouraging number. But one has to be a little bit careful in interpreting this number… especially this month as there is a Diwali effect,” Chief Economic Adviser Arvind Subramanian said.