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IIP grows 4.7% in May, highest since October 2012

The IIP data comes a day after finance minister Arun Jaitley presented his maiden Budget.

By: ENS Economic Bureau | New Delhi |
July 12, 2014 12:53:48 am

Showing signs of recovery, industrial output rose 4.7 per cent in May, the highest since October 2012, due to improved performance of manufacturing, mining and power sectors and higher output of capital goods.

The index of industrial production (IIP) figures released by the ministry of statistics and programme implementation showed that during the month, while electricity generation grew 6.3 per cent compared to 6.2 per cent during the corresponding period last year, the manufacturing sector grew 4.8 per cent during the month compared to a contraction of 3.2 per cent last year.

The manufacturing sector constitutes over 75 per cent of the IIP and a growth in the sector reflects the revival of investments in the country. The sector had grown 2.6 per cent in April after six months of negative of below one per cent growth. The May growth reflects bottoming out of the economy, India Inc said.

The IIP data comes a day after finance minister Arun Jaitley presented his maiden Budget, laying down the foundation for structural reforms and giving a push to the manufacturing sector to augment growth. During the April-May period of the current fiscal, IIP recorded a growth of 4 per cent, as against contraction of 0.5 per cent in the first two months of 2013-14.

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Among the use-based classification, all the sectors including consumer goods, consumer durables, capital goods and basic goods posted robust growth. Improved consumer sentiments pushed up consumer durables 3.2 per cent compared to a contraction of 18.3 per cent same period last year while consumer non-durables grew 3.9 per cent as against a growth of 3.8 per cent last year.

“It provides a glimmer of hope that the economy could be bottoming out…The favourable base effect and the double-digit export growth during the month could have also contributed in boosting industrial activity during the month, but the overall trend is positive,” Chandrajit Banerjee, director general, CII, said.

Production of capital goods, a barometer of demand, grew 4.5 per cent, in sharp contrast to a contraction of 3.7 per cent in same month of last year. The mining sector also posted a growth of 2.7 per cent as against a dip of 5.9 per a year ago.

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