The manufacturing sector, which constitutes over 75% of the index, grew by 6.9% in August, while the capital goods output rose by 21.8% in the month indicating a recovery.
Showing signs of recovery, industrial output rose to nearly 3-year high of 6.4% in August on improvement in manufacturing and capital goods while retail inflation remained with in comfort zone.
The manufacturing sector, which constitutes over 75% of the index, grew by 6.9% in August, while the capital goods output rose by 21.8% in the month indicating a recovery.
Commenting on the twin macro economic data, Chief Economic Advisor Arvind Subramanian said, "Encouraging news on Indian economy. IIP growth increased to 6.4%, consistent with indirect tax revenue performance. Core inflation moderate." The previous high of factory output growth was recorded in October 2012 at 8.4%. The factory output had grown by 0.5% in August last year.
Industrial output, measured in terms of the Index of Industrial Production (IIP), was at 4.1% in the April-August period against 3% in the year-ago period, the data released by the Central Statistics Office (CSO) on Monday showed.
As regard retail inflation, the Consumer Price Index rose to 4.41% in September from 3.74% in August this year but remained in comfort zone. RBI has projected 5.8% retail inflation by January, 2016.
"The growth in manufacturing seems to be accelerating and we are hopeful of higher growth in the coming months.. Government s efforts to revive manufacturing has started yielding results," said FICCI Secretary General A Didar Singh.
Chief Economist, India Ratings & Research Devendra Kumar Pant said, "Sharp fall in inflation and monetary easing has increased demand for consumer durable. This is partially due to initiation of festival season. Bond market is likely to respond favourably to IIP data and bond yields are likely to fall by around 5 basis points in tomorrow's trade."
Meanwhile, the IIP growth for July has been revised slightly downwards to 4.1% from provisional estimate of 4.2% last month.
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