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India's Index of Industrial Production, or IIP, did exceedingly well for the second successive month in July, after a dismal performance due to global financial melt-down during last September.
The agricultural production slump is likely to be offset by industrial growth and help the economy to grow.
As per the data released Friday by the Central Statistical Organization of the Ministry of Statistics and Programme Implementation, the IIP for July had a growth rate of 6.8%, higher than the 6.4% for the corresponding month last year, and much lower than the revised growth rate for June.
The cumulative growth for the period April-Jul 2009 stood at 4.6%, down from 5.6% for the corresponding period last year.
The ministry also raised the estimated growth for June to 8.2% from the earlier 7.8%.
During July, the growth rate of the manufacturing sector, with a weightage of 79.4%, fell marginally to 6.8% from 6.9% in July of the preceding year, and the power sector also dropped slightly to 4.2% from 4.5% for the corresponding month last year. The growth rate of the mining sector showed a robust growth of 9.9%, compared to 2.8% in July last year.
Of industries, 15 out of the 17 industry groups showed a positive growth in July, compared to the corresponding month of the preceding year. The industry groups consisting of 'Wool, Silk and Man-made Fibre Textiles' showed the highest growth of 30.4%, followed by 15.2% in 'Leather and Leather & Fur Products' and 12.7% in 'Rubber, Plastic, Petroleum and Coal Products'. On the other hand, the industry group 'Jute and Other Vegetable Fibre Textiles (except cotton)' witnessed a negative growth of 23.9%, followed by 0.4% in 'Cotton Textiles'.
As per the use-based classification of the IIP, the capital goods sector in July plunged to 2.0% from 17.9% in July last year.
The IIP stated that during July, the growth rate of basic goods fell to 4.8% from 5.3% in the corresponding month of the preceding year. Intermediate goods grew considerably by 9.0%, compared to 3.0% for the same month last July.
In this July, the growth rate of the consumer durables sector significantly increased to 19.8% from 13.9% in July of the preceding year. The growth rate of non-durables grew to 5.0% from 3.4% for the same month last year. As a result, the growth rate of overall consumer goods rose to 8.8% from 5.9% last July.
Along with the Quick Estimates of IIP for July, the indices for June underwent the first revision, while those for April had the second and final revision, in the light of the updated data received from source agencies.
During July, the growth rate in six core-infrastructure industries, having a combined weight of 26.7% in the IIP, was 1.8%, compared to 5.1% in July 2008, mainly on account of a steep fall in the output of petroleum products and steel.
Anand Rathi of Mumbai-based Financial Services, says: "The number is stronger than what we expected, and indicates a strong industrial recovery. However, this recovery is surprising, as core sector growth is still weak and export growth is strongly in the negative."
Reserve Bank of India (RBI) governor Duvvuri Subba Rao said India would exit the expansionary monetary regime sooner than other countries, as inflationary pressures were showing up. He, however, did not provide a time-frame for exiting the accommodative regime.
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