New Delhi: India’s industrial output maintained its double-digit growth run in December 2006 at 11.1%, buoyed by close to the 12% expansion in manufacturing activity, according to data released by the central government.
This takes industrial growth based on the index of industrial production (IIP) in the firstnine months of the current fiscal to 10.8%, higher than the 8% achieved in April-December 2005.
Manufacturing sector has grown 11.8% in this period, compared with 9% during the corresponding period last year, implying that the target of 11.3% projected in the revised gross domestic product estimates for 2006-07 is within grasp.
Devendra K. Pant, associate director with Fitch Ratings India, said, “The industrial recovery which started in 2003-04 with consumer goods, is now being taken forward by the capital goods sector, which essentially showed that investment demand was being sustained even at a high level.”
“Even capital goods imports are growing well,” the fitch associate director added.
A breakup of the IIP, which estimates production in utilities, mines and factories, showed that December’s growth comes on top of the record growth of 16.7% achieved by the manufacturing industry in November. The overall index, had grown 15.4% that month.
Capital goods, growing at 20.2%, has been the main driver of industrial expansion. Within the sector, basic metals, alloys, and metal products showed the highest growth of 26.5%, compared to only 12% in November. The slowdown was seen mainly in consumer goods, durables in particular from 10.3% to 3.3%, and mining, from 8% to 3.8%.
Confederation of Indian Industry said in a statement that the high IIP growth “is broadbased and in line with the trend so far.” It added, “The current momentum is going to be maintained and may also improve.”
For January 2007, Morgan Stanley analyst Chetan Ahya expected a 10% to10.5% IIP growth, based on lower sales of commercial vehicles and cement dispatches in December.