Industrial production expanded at a strong 11.8% in October, bouncing back from a sharply lower 6.8% in the previous month, as factories produced more to meet buoyant consumer purchases on the eve of the festivals of Id-ul-Fitr, Dussehra and Diwali.
Manufacturing industries grew by 13.3%, the fastest in seven months, against 3.8% a year ago, and beating analysts expectations of 10%, data released by the Central Statistical Organisation (CSO) said.
They had grown by only 7.1% in September. The key contributors were machinery and equipment, basic chemicals and chemical products, beverages and tobacco products, and transport equipment and parts.
Both consumer durables and essential goods picked up remarkably. Durables, which had dropped by a steep 7.1% in September, leading industry to question the CSO data, grew by 9.3% compared with 0.2% a year ago, while food and grocery items rose 13.9% against a decline of 4.1%.
Chief statistician of India Pronab Sen said: “The figures prove that the festival sales beat the general industrial downturn.” In an earlier interview, Sen had explained the September dip by way of the festivals falling later this year, compared with 2006, when it happened in September.
“The sharp rise in consumer durables growth in October partly show a similar statistical blip, as sales last year this time showed the traditional post-festival fall,” he added.
Expressing concern over the decline in growth of consumer durables, the mid-year review of the economy presented by finance minister P. Chidam-baram in Parliament last week had said: “To the extent that some new and fast moving items may not have been included in the the IIP (index of industrial production) basket, updating the base year assumes urgency... The process needs to be expedited so that information flow about this sector is consistent with ground realities.”
The current IIP, which has 1993-94 as the base year, is being updated to 1999-2000. The list of items will also be reshuffled, including newer items such as microwave ovens and music players in favour ofoutdated ones such as typewriters.
That the industrial boom is sustaining is reflected in capital goods production, which grew by 20.5% in October compared with 6.5% a year ago. Sen said that although the pace had slackened a bit in this sector, compared with 22-23% in May-June, it was still quite comfortable, reflecting the high order-book backlogs. “For an overall growth of 9%, a 17-18% capital goods sector expansion is essential, so we’re still in line,” he added.