Aided by a sharp recovery in manufacturing sector, the country’s industrial output grew a better-than-expected 5.9 per cent in November 2011 from a year earlier. This performance is being seen as a rebound from the 5.1 per cent negative growth in industrial output recorded in October last year.

The October 2011 IIP data has now been revised to a contraction of 4.74 per cent against a negative growth of 5.1 per cent estimated earlier.

Factory output had registered 6.4 per cent growth in November 2010 on a year-on-year basis.

WPI inflation

With IIP data showing huge volatility, the Reserve Bank of India (RBI) is unlikely to read too much into the latest data. All eyes are now on the wholesale price index (WPI) inflation for December.

The central bank may look at reversing its monetary policy stance if the WPI print for December reflects a noticeable downtrend, say economists and analysts. The majority view is that RBI is likely to continue with its pause stance at its January 24 review.

Manufacturing sector

Manufacturing sector, which accounts for 75 percent of the IIP, recorded 6.6 per cent growth in November 2011 against 6.5 percent in the same month in the previous year. In October 2011, manufacturing sector had recorded a negative growth of 6 per cent.

Meanwhile, capital goods (a proxy for investment activity in the economy) output fell 4.6 per cent in November on a year-on-year basis. Production of capital goods fell 25.5 per cent in October 2011.

Basic goods production recorded 6.3 per cent growth in November 2011 against a growth of 5.7 per cent in the same month last year. Production of intermediate goods increased marginally by 0.2 per cent (4.3 per cent).

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