February factory output signals modest recovery

Factory production data has remained positive in February,making it the first time this financial year when two successive months have shown a positive growth

Written by ENS Economic Bureau | New Delhi | Published: April 13, 2013 2:20 am

Factory production data has remained positive in February,making it the first time this financial year when two successive months have shown a positive growth.

The numbers released by the Central Statistics Office has made analysts hopeful that the economy is on the path of recovery. The 0.6 per cent rate of growth in the index of industrial production for the month means the industrial sector has expanded at 0.9 per cent this year in eleven months.

Planning Commission deputy chairman Montek Singh Ahluwalia said the February numbers were “consistent to what we have been saying that 2012-13 was not a good year”. He said he was glad the figures were not negative “but it is very low”.

The slightly positive turn was made possible by a strong showing by the capital goods sector. Year-on-year the sector has grown 9.5 per cent which Aditi Nayar,senior economist at ratings agency Icra said could be due to “lumpiness in order completion”. On a more sanguine data Tushar Poddar,managing director and chief India economist at Goldman Sachs remarked there was “green shoots in the data”.

According to the data released,the capital goods sector saw a growth of 9.5 per cent during February as against 10.5 per cent during the corresponding year ago period while the manufacturing sector grew by 2.2 per cent during the month as against 4.1 per cent during the corresponding year ago period.

However,the mining sector shrank 8.1 per cent as against a growth of 2.3 per cent during the same period last year. The electricity generation also contracted 3.2 per cent as against a growth of 8 per cent last year.

The production of basic goods and intermediate goods also declined,reflecting a complete slowdown or stagnation in investment flow in the economy. The consumer goods sector also witnessed a decline of 2.7 per cent as against a decline of 6.7 per cent during the same period a year ago. The fall in consumption demand is corroborated by the fall in the sale of passenger cars which fell for the first time in a decade.

In terms of industries,13 out of 22 industry groups in the manufacturing sector showed positive growth during February. The industry group electrical machinery and apparatus grew by a staggering 73 per cent,followed by wearing apparel,dressing and dyeing of fur by 18.5 per cent. On the other hand,the group including medical,precision and optical instruments,watches and clocks showed a negative growth of 27.6 per cent followed by 25.6 per cent in publishing,printing media.

Retail inflation dips to 10.39% in March

Retail inflation declined to 10.39 per cent in March,snapping the five month rising trend,as prices of vegetables and protein based items eased.

The Consumer Price Index (CPI) based inflation was at 10.91 per cent in February. The inflation,however,continued to remain in the double digit terrain for the fourth consecutive month in March. The prices in the vegetables basket eased to 12.16 per cent in March. It was 21.29 per cent in February. Inflation in protein-based items — egg,meat and fish — stood at 14.36 per cent during the month. In oils and fats segment,it stood at 11.72 per cent. Among all the constituents that make the CPI,cereals recorded the highest inflation of 17.55 per cent in March,according to data released today.

Besides,inflation in pulses stood at 11.38 per cent and in sugar it was 11.65 per cent on an annual basis. PTI

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