India’s industrial production surges to 2-month high

India’s industrial production output saw a major turnaround, growing at 4.1 per cent in April, primarily driven by India’s booming manufacturing sector. The growth was more than expected for the month of April, reaching a two-month high, which brought a feel good factor in the industry.

Output at factories, mines and utilities grew at an annual rate of 4.1 per cent in April, the fastest pace since February. The figures of this growth are above market expectation, which was higher than March’s 2.5 per cent growth and the economists’ forecast 1.6 per cent.

The growth in the industrial outputs indicates that the market recovery is currently underway, which is also evident by higher excise duty collections during the month.

Hours before the release of the data, India’s Finance Minister Arun Jaitley had said, “We consider the economy is recovering. We are on a roadmap for a much higher growth.”

The industrial growth for March 2015 too has seen an upsurge to 2.5 per cent from 2.1 per cent, as per the data released by the government on June 12.

According to CII Director General Chandrajit Banerjee, the CII is hopeful of growth picking up pace in future, backed by positive sentiment and a flurry of policy initiatives undertaken by the government. However, the industry feels that the good days in the market are yet to come.

In April 2014, the factory output, measured by the Index of Industrial Production (IIP), was 3.7 per cent.

India’s manufacturing sector witnessed the maximum growth. Manufacturing output, which accounts for over 75 per cent of the index, grew at higher rate of 5.1 per cent in April this year as compared to 3 per cent in the same month last year.

The production of capital goods, however, saw a decline in its growth rate, growing at 11.1 per cent in April as against 13.4 per cent in the same month last year.

The several reform initiatives taken by India’s Prime Minister Narendra Modi-led government have been well supported by the RBI. The future seems to be even bright with more investments coming into the country’s growing market. Despite the positive growth, there are challenges ahead, and the government will need to address those in order to further boost the economy.