NEW DELHI: India’s industrial output grew by 8.2 percent year-on-year in October, the fastest rate in 16 months, official data showed yesterday in the first strong sign the worst may be over for the economy.
The industrial output of Asia’s third-largest economy marked a sharp improvement from a revised contraction of 0.7 percent in September and far outpaced market expectations of a five percent rise.
“We think the lowest point is behind us — we do see a mild, gradual recovery taking shape,” Shubhada Rao, chief economist at India’s Yes Bank, said.
Manufacturing climbed 9.6 percent from a year earlier while capital goods production — output of factory machinery and other equipment — surged 7.5 percent, reflecting anticipated stronger future demand.
The overall 8.2 percent rise in output from factories, mines and utilities was inflated by a weak base effect from a year earlier. It got an extra boost from the religious festival season when buying is considered auspicious, economists said.
However Credit Suisse economist Robert Prior-Wandesforde said “the economy has bottomed and is beginning to strengthen” although there would be bumps on the way. Output accelerated at its quickest pace since June 2011 and shows the economy is “on the mend”, he said.
The figures represented the best economic news in months for the scandal-scarred government of Prime Minister Manmohan Singh, who is keen to revive the economy with his Congress-led administration facing elections in 2014.
The once-booming economy has been hit by continuing high interest rates in the face of stubbornly strong inflation now running at 7.45 percent, falling exports and slow investment.
Economic growth has been stuck at three-year lows with India posting expansion of 5.3 percent in the quarter to September.
Finance Minister P Chidambaram called the output figures “encouraging” and said he would press ahead with more economic reforms, including imminent legislation to liberalise the mainly state-run banking sector.
AFP
