Industrial IIP output surges to 6.8

On the other hand,output of the mining and capital goods sectors contracted by 1.5 per cent and 2.7 per cent respectively during the month.

8220;January IIP8230; is strong recovery in the backdrop of last December8217;s figure,8221; Finance Minister Pranab Mukherjee said.

Deputy Chairman Planning Commission,however,said that one will have to wait for February data before concluding that downturn is over.

Although the growth in industrial output during January 2012 at 6.8 per cent,it is less than 7.5 per cent recorded in the same month last year. On sequential basis,this is the highest growth since June 2011 when it was 9.5 per cent.

During the April-January period this fiscal,the IIP growth stood at 4 per cent,as against 8.3 per cent in same period in 2010-11.

The recovery may refrain the Reserve Bank,which cut CRR to inject Rs 48,000 crore liquidity into the system last Friday,from reducing interest rates in the mid-quarterly credit policy on March 15.

8220;With 75 basis points CRR cut already,RBI will wait for the Budget to take any monetary action,8221; Crisil Chief Economist D K Joshi said. The annual monetary policy for 2012-13 will be announced on April 17.

Output of the consumer goods sector grew 20.2 per cent in January,compared to 8.3 per cent in the same month last year.

The production of the non-durable consumer goods segment has shown signs of improvement and grew by 42.1 per cent in the month under review. Power generation,however,witnessed slow growth of 3.2 per cent in January,compared to 10.5 per cent in the year ago period.

During the month,13 of the 22 industry groups witnessed growth. Output of basic goods went up by meagre 1.6 per cent,as against 7.7 per cent in the year ago period. However,intermediate goods witnessed a contraction of 3.2 per cent,as against 7.4 per cent growth in January last year.

Commerce and Industry Minister Anand Sharma said he is optimistic that the measures taken by the government in consultation with the industry will yield results.

Last month,Central Statistical Organisation CSO had estimated that the economy would grow at a slower pace of 6.9 per cent this fiscal,as against 8.4 per cent in 2010-11.

8220;IIP data has moved up pretty close to 7 per cent,is a good development. Our feeling is that we may end up with 7 per cent economic growth this fiscal,8221; Ahluwalia said.

8220;If it looks like the downturn has come to an end then we should certainly do better than 7 per cent economic growth next fiscal,8221; he added.

Ficci Secretary General Rajeev Kumar said,8221;The Budget should have more measure for investment in the economy.8221;

Industry officials have blamed the slowdown in growth to the high interest rate regime that has made borrowings costly and curbed consumer spending.

Prime Minister8217;s economic advisory panel chief C Rangarajan has said that the policy rate cuts by RBI would depend on inflation movement. Overall inflation has started showing sign of decline at 6.55 per cent in January.

8220;We believe IIP growth bottomed out in Q4 2011 and should gradually recover over the course of the year,supported by lower cost pressures and a reversal of the rate cycle,8221; Nomura Economist Sonal Varma said.