India industrial output to mitigate poor monsoon: Goldman

India industrial output to mitigate poor monsoon: Goldman

Mumbai: Goldman Sachs expects economic gains from industrial activity to mitigate the negative impact of poor rains, it said in a note on Wednesday after government data showed June factory output surged to a 16-month high.

Industrial output rose to 7.8% in June from a year earlier, beating forecasts by a wide margin, as higher salaries of government employees and stimulus spending boosted consumer demand.

Several indicators of consumption and investment demand such as the Purchasing Manager’s Index and motor vehicle sales have been showing significant gains, Goldman Sachs said.

Financial conditions have also continued to loosen over the summer, which mitigates the negative impact from a contraction in the agricultural sector due to weak monsoons, said Goldman economists.

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