The sharp jump of 8% in core industrial production in September may be more than just the annual pre-Diwali phenomena. There are chances that some growth would be sustainable, said economists.
Typically, industrial production rises significantly a month ahead of Diwali and falls thereafter.
Also, this year, the low base effect came into play.
“We should not over-interpret one month’s data, especially when there are base effects and an element of seasonality involved in the run-up to Diwali. But the growth in core industry data is certainly consistent with a modest industrial lift underpinned by external and rural demand,” said Sajjid Chinoy, India economist, JP Morgan.
The eight core industries have a combined weight of 37.90% in the Index of Industrial Production (IIP). The growth of 8% in core industrial production in September may lead to a modest growth in IIP, which is due to be announced on November 12.
“The IIP may post a modest improvement in September as compared to the first five months of this fiscal,” said Aditi Nayar, senior economist, ICRA.
Economists, however, said that it would be premature to conclude that this marks a turnaround in the industrial production trend.
“We will have to wait for two more months to see whether this growth is sustainable or not,” said DK Pant, chief economist at India Ratings, the India arm of the international ratings agency Fitch.