Manufacturing cheers: Industrial production jumps to five-year high of 9.8% in October

New Delhi: Robust production of consumer and capital goods propelled the October industrial output to a five-year high at 9.8 percent, which is possibly driven by a spurt in demand due to Diwali purchases. The IIP growth for September has been revised upwards to 3.84 percent while it was -2.7 percent in October 2014.[caption id=“attachment_2528104” align=“alignleft” width=“380”]  Rising production. Reuters[/caption] “The latest 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,” Chief Economic Advisor Arvind Subramanian told reporters today and expressed hope it would become a trend. The previous high in the index of industrial production was in October 2010 at 11.36 percent. As per data released by the Central Statistics Office (CSO), the manufacturing sector, a key indicator of economic activity, grew 10.6 per cent year-on-year in October. Electricity generation expanded 9 percent and the mining sector was up 4.7 percent. The cumulative growth in IIP for April-October 2015-16 was 4.8 percent over the same period last fiscal. The expansion in the consumer durables segment was a whopping 42.2 percent in October over the same month last year. While the consumer goods category paced up at 18.4 percent, consumer non-durables rose by 4.7 percent. The data showed capital goods segment grew 16.1 percent while the expansion in basic goods came in at 4.1 percent. On IIP data, industry chamber Assocham said: “What is even more pleasing is a huge 16.1 per cent growth in capital goods, reflecting revival in investment cycle and a robust expansion of 9 per cent in electricity generation, which follows solid improvement in coal production.” Some of the important items showing a high positive growth in October on an annual basis include gems and jewellery (372.5 percent), sugar machinery (103.4 percent), and telephone instruments, including mobile phones and accessories (61.5 percent). Industry chamber Ficci said outlook for growth remains positive and can be strengthened in coming months if pace of reforms continues. “The global slowdown continues to impact trade and affect India’s exports adversely, thus impacting manufacturing growth especially when domestic demand is also sluggish,” it added. Expressing relief, engineering exporters’ organisation EEPC India today said a similar feat is desperately required in exports as well. According to the data, in terms of industries, 17 out of the 22 industry groups in the manufacturing sector registered a positive growth in October 2015 compared with the same month last year. The industry group furniture-manufacturing has clocked the highest growth of 138.9 per cent, followed by 48.4 percent in office, accounting and computing machinery and 47.5 percent in radio, television and communication equipment and apparatus. In contrast, the industry group publishing, printing and reproduction of recorded media has moved at the lowest growth of (-)10.2 percent, followed by (-)6.8 percent in medical, precision and optical instruments, watches and clocks and (-)2.9 percent in coke, refined petroleum products and nuclear fuel. PTI