Aided by a pre-festival ramp-up in demand and a favourable base effect, factory output grew a robust 9.8 per cent in October.
This Index of Industrial Production (IIP) was much higher than the revised growth level of 3.84 per cent in September this year. In October last year, IIP had contracted 4.2 per cent, hitting a three-year low.
Industrial growth in October was led by a 42.2 per cent expansion in consumer durables and 16.1 per cent growth in capital goods output, both of which had contracted in October 2014.
While manufacturing grew 10.6 per cent in October, electricity and mining grew 9 and 4.7 per cent, respectively.
Consumer goods segment grew 18.4 per cent and consumer non-durables, 4.7 percent.
For the April-October period, IIP grew 4.8 per cent, official data released on Friday showed, lending support to the view that a narrow economic recovery is under way.
‘Good number’ Reacting to the latest IIP number, Chief Economic Advisor Arvind Subramanian said that the October number was good.
“It’s a high number, encouraging. One would, however, have to be careful interpreting the number due to Diwali impact,” Subramanian said.
Aditi Nayar, Chief Economist, ICRA, a credit rating agency, said the spike in industrial growth is likely to be a “short-lived statistical aberration”.
“With a reversal of the base effect, we expect a substantial moderation in IIP growth in November 2015, in line with the trend recorded by automobile production,” she said.
Following the healthy growth of 14.4 per cent in October 2015, aggregate auto production displayed a contraction of 9.8 per cent in November, according to data released by SIAM.
Additionally, a sharp slowdown in growth of thermal electricity generation is expected to weigh on the performance of IIP in November, according to Aditi Nayar.
A Didar Singh, Secretary-General, FICCI, said that though manufacturing registered high growth in October, the low base in major sectors such as capital goods and consumer durables has contributed significantly to this.
“Nonetheless, the outlook for growth remains positive and can be strengthened in coming months if pace of reforms continues,” he said.