IIP up 2.5% in March; at two-decade low in FY’13

The country's industrial output in March surged at its fastest pace in five months, up 2.5 per cent from a year earlier against February's 0.5 per cent growth. The rise in the factory output estimates, measured by the Index of Industrial Production (IIP), came on the back of healthy growth in the manufacturing and capital goods sectors, data released by the Central Statistics Office showed.

For the fiscal 2012-13 as a whole though, the IIP slipped to one per cent, the lowest since 1991-92, when the factory output grew by just 0.6 per cent. The index grew by 2.9 per cent during 2011-12.

Responding to the March numbers, Economic Affairs Secretary Arvind Mayaram said, "This is exactly the trend we are hoping. If it (the trend) continues, inflation comes down and growth should begin to pick up, I am quite confident that (the economic) growth in current fiscal would cross the 6 per cent mark."

Commenting on the data, chairman of the Prime Minister's Economic Advisory Council, C Rangarajan, said: "This will be the second or third month in which the manufacturing growth will be positive. We were for a time in the negative territory... All this clearly indicates that we are in the upward direction. We need a much, much stronger industrial growth, but certainly the direction in which it is moving is encouraging."

The manufacturing sector, constituting over 75 per cent of the index, posted a growth of 3.2 per cent as against a contraction of 3.6 per cent during the corresponding year-ago period. The capital goods sector, widely seen as a proxy for investments, grew 6.9 per cent during March as against 20.1 per cent during the year-ago. The electricity generation also inched up 3.5 per cent in March as against 2.7 per cent.

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