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| Edited By: |Source: |Updated: Mar 30, 2018, 03:49 AM IST
India's industrial output soared by 10.8% in October and the double-digit growth is likely to prompt the RBI to take more steps to tame inflation at its monetary policy review next week.
Robust demand for automobiles, electronic goods and power equipment spurred the growth in factory output which encouraged finance minister Pranab Mukherjee to exude optimism that industrial output would grow in double digits on an annual basis as well.
Index of Industrial Production (IIP) growth had registered a slowdown in the previous two months and was pegged at a sluggish 4.4% in September, 2010, after surging by 15% in July.
Encouraged by the surge in industrial output in October, Mukherjee expressed hope that the trend will continue and industrial production will register double-digit growth for the entire fiscal.
"This (industrial production number) is quite encouraging. I hope this trend will continue and double-digit growth in industry would be possible," Mukherjee said in New Delhi.
Referring to the average IIP growth rate of 10.3% during the April-October period, the minister said, "The trend is encouraging, all the three important sectors -- industry, agriculture and services -- are evenly growing and making a contribution to the GDP, which is a healthy sign."
Commenting on the figures, prime minister's economic advisory council (PMEAC) chairman C Rangarajan said, "It is a welcome sign. It appears that the decline in IIP which we have seen in the last few months has been reversed. Therefore, on the whole, one should expect IIP at a growth rate of 10% in the current fiscal."
The robust industrial growth figure buttresses the government's latest projection for the Indian economy to return to the 9% GDP growth trajectory in FY' 2010-11 for the first time after the global economic slowdown. The economy grew by 8.9% ent in the first half of the fiscal.
The high industrial output gives the RBI the leverage to take more steps to check inflation, which at 8.58% in November, is much above the "comfort level". The RBI wants to bring down inflation to 5.5% by the end of the fiscal and then further to 4-4.5%, with the medium-term objective of reducing it to 3%.
RBI deputy governor KC Chakarabarty had told reporters in Kolkata that the central bank could increase key policy rates if the situation so warrants, the three-month pause indicated by RBI governor D Subbarao notwithstanding.
"The governor said that it may not be necessary... but that does not mean if the pause is there, you cannot do that (rate hike )... If it needs to be done, it can be done, that is his (governor's) choice," Chakrabarty said.
The RBI, which has raised key policy rates six times this year so far to contain inflation, is slated to hold its second mid-quarterly policy review on December 16.
Although the economy is doing very well on the growth front, inflation is still high, planning commission deputy chairman Montek Singh Ahluwalia said, adding that the government will have to keep a vigil.
"Growth is doing very well. Things are improving on inflation, but in the present situation, inflation is still high. We cannot relax vigil on inflation," he said.
"The present growth rate of IIP shows that revival of economic growth as started a year back is continuing," said minister for statistics and programme implementation Sripakash Jaiswal.
The government attributed the rise in IIP to the improved performance of the ship-building and power equipment sectors.
In addition, Jaiswal said high growth in production of consumer durable goods was mainly due to a healthy jump in production of passenger cars, motor cycles, scooters, mopeds, alarm time pieces and TV sales.
The IIP data reveals that manufacturing sector output grew by 11.3% in October, 2010, compared to 10.8% in the corresponding month of the previous year, while electricity production jumped by 8.8% in the month under review vis-a-vis 4% in October, 2009.
Mining output growth, however, slowed to 6.5% in October, 2010, from 9.1% in October, 2009.
The capital goods industry, according to data, recorded a growth of 22% in October, up from 10.9 % in the same month a year ago.
During the April-October period, industrial output grew by 10.3% on average, compared to 6.9% expansion in the corresponding period last year.
