Up 2%,factory output shows signs of recovery; Retail inflation moves back in double-digit zone

While the latest factory output data points to a slight uptick in industrial production,the fact that retail inflation has moved into the double-digits presents a challenge of sorts before policy makers looking to revive GDP growth,which fell to a decade’s low of 4.4 per cent in the first quarter of the current fiscal.

The 2 per cent year-on-year growth in the index of industrial production (IIP) in September was driven by an uptick in export and domestic orders,data issued on Tuesday showed. The manufacturing sector,which constitutes about 76 per cent of industrial production,grew at 0.6 per cent from a year earlier. Capital goods production,a barometer for investment activity in the economy,contracted by 6.8 per cent in September from a year earlier.

According to data released by the ministry of statistics and programme implementation,the mining sector grew 3.3 per cent during September as against 2.2 per cent during the corresponding period a year ago,while electricity generation grew 12.9 per cent as against 3.9 per cent posted during the same period a year ago.

Overall,during the first half of current fiscal,the IIP inched up 0.4 per cent as against 0.1 per cent during April-September.

Calling the data below-expectation,experts said second half of the current fiscal is likely to be better due to several drivers,including a good monsoon and healthy exports. “We expected it to be better due to a good show by the core sector. However,that has not been the case. This indicates that the non-core sector continue to be a drag on the overall IIP. This is not a decisive upturn,it is a sub-power IIP,” DK Joshi,chief economist,Crisil said.

Mixed bag

* The 2% YoY growth in September IIP was driven by an uptick in export and local orders

* Capital goods production contracted by 6.8% while manufacturing sector grew at 0.6% from a year earlier

*CPI-based inflation surged to 10.09% in October from September’s 9.84%