While the industrial growth in India hit a five-year high of 9.8 per cent in October, owing to the festive season, economists have warned that too much should not be read into a month's data.
The sharp rise in the index of industrial production was propelled by manufacturing which registered 10.6 per cent growth during October, latest data showed. While mining activity saw a marginal pick-up, there was strong growth in electricity too. Industrial activity had contracted by 2.7 per cent during October 2014 and was estimated to have grown by 3.8 per cent in September, 2015. Although economists said the higher-than-expected showing was on account of a low base, the data is in line with trends from the second quarter GDP data, which had estimated that the manufacturing sector grew by 9.3 per cent. Strong industrial growth beat analyst estimates, and augurs well for the economy and job creation.
Consumer durables, evident from auto sales data that were released last month, emerged as a star, clocking 42.2% growth, compared to 35% contraction in October 2014. There was also a strong performance from consumer goods (18.4%) and capital goods (16.1%). In recent months, there has been a revival in the capital goods segment which indicates that the overall industrial activity may be more robust as machinery and equipment will be used for further production in factories and plants.
Chief economic advisor Arvind Subramanian said, “The latest October IIP is very good. It's a high number, good number and encouraging number. But one has to be a little bit careful in interpreting this number... especially this month as there is a Diwali effect.”
