Macro-economic data points – retail inflation, factory output — released on Tuesday presented good tidings for the Indian economy and markets, coming as they did within hours after the IMD’s forecast of above-average monsoon this year.

All this was icing on the cake to the International Monetary Fund’s latest pronouncement — in its World Economic Outlook on Tuesday — that India would remain the fastest growing economy in the world with GDP growth of 7.5 per cent in 2016 and 2017.

Breaking the spell of contraction in industrial output in the past three months, the Index for Industrial production (IIP) growth for February came in at 2 per cent.

This was, however, lower than 4.8 per cent growth recorded in February last year.

Electricity, gems and jewellery and minerals aided the overall industrial performance growth.

Sequential turnaround The sequential turnaround to a growth of 2.0 per cent in February 2016 from the contraction in the previous month, was broad-based, with an improved performance of all the sub-sectors except consumer non-durables, said Aditi Nayar, Senior Economist, ICRA, a credit rating agency.

In particular, the higher growth of consumer durables despite a somewhat adverse base effect, the year-on-year rise in manufacturing output after three months of contraction as well as the fewer number of its sub-sectors witnessing contraction in February 2016 are encouraging trends, she added.

The electricity sector was the chief driver of growth in February, contributing an estimated 0.9 per cent of the 2.0 per cent rise in the IIP Index in that month.

IIP growth stood at a meagre 2.6 per cent in April 2015-January 2016, lower than the 2.8 per cent rise recorded in the first 11 months of 2014-15.

The performance was mixed across the use-based categories, with a weaker performance displayed by basic goods, capital goods and consumer non-durables, offsetting improvements in consumer durables and intermediate goods in the first 11 months of 2015-16 as compared with the same period of the previous fiscal.

“The IMD’s forecast of an above-normal monsoon has boosted the outlook for rural demand, which should help arrest the sustained contraction in consumer non-durables over the coming months,” Nayar said. Soft oil prices and moderation in food prices kept the retail inflation in check at 4.83 per cent in March 2016. This was lower than 5.26 per cent in February this year and 5.25 per cent in March 2015.

“Although with setting of the summer season, we expect pressure on vegetable/ fruit prices to re-emerge in the coming months, the overall CPI is unlikely to deviate much from the current levels,” said Sunil Kumar Sinha, Principal Economist, India Ratings, a credit rating agency.

Srivats.kr@thehindu.co.in

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