Quick Edit | Humming shop floors

Quick Edit | Humming shop floors
Comment E-mail Print Share
First Published: Sat, Jul 11 2009. 12 15 AM IST
Updated: Sat, Jul 11 2009. 12 15 AM IST
A tentative recovery in industrial production seems to have begun.
The government said on Friday that factory output in May was 2.7% higher than the same month last year. This is the second month in a row that India’s industrial output expanded.
Other high-frequency data such as various purchasing managers’ indices and car sales suggest that this recovery is likely to extend into June. That means we are unlikely to see a repeat of January, when expansion was followed by two months of contraction in February and March.
Demand from domestic consumers seems to be driving the recovery. There are two reasons why we say this. One, the 29% drop in exports in May showed that foreign demand for Indian products continues to be weak. Two, production of consumer goods has soared, even as that of capital goods fell.
The government’s fiscal stimulus packages have done the trick. The only question is how long the government can splurge to support the economy.
Comment E-mail Print Share
First Published: Sat, Jul 11 2009. 12 15 AM IST