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Industrial output rises 7% in June

New Delhi: Industrial output grew 7 per cent in June, a four-month high, because of a low base effect last year when manufacturing had slowed and dealers had cut stock ahead of the rollout of the goods and services tax.

"Excellent numbers of IIP growth for June. IIP rises 7 per cent," economic affairs secretary Subhash Chandra Garg tweeted.

IIP figures have been on a see-saw - a 4.8 per cent pick-up in April was followed by a 3.9 per cent dip in May and then again a 7 per cent rise in June.

Growth in factory output, measured in terms of the index of industrial production (IIP), was revised upwards for May at 3.9 per cent from the previous estimate of 3.2 per cent, according to data released by the Central Statistics Office (CSO) on Friday.

"IIP growth in July is unlikely to sustain the 7 per cent level recorded in June, led by a modest slowdown in growth of coal output, automobile production and electricity generation as well as an unfavourable base effect," Aditi Nayar, principal economist with Icra, said.

The manufacturing sector, which constitutes 77.63 per cent of the index, grew 6.9 per cent in June against a decline of 0.7 per cent in the year-ago month. Power generation saw a rise of 8.5 per cent during the month compared with a 2.1 per cent growth a year ago.

The output of the mining sector recorded an impressive growth of 6.6 per cent in June against 0.1 per cent in June 2017.

"The jump in the production of capital goods and infrastructure/construction goods is positive. Even on a low base of last year, this could be the reflection of a positive investment trend in sectors such as roads, railways and affordable housing. What is also noteworthy is the spike in consumer durables demand," Chandrajit Banerjee, director-general of CII, said.

"The sign of an upturn in IIP is encouraging, as it is indicative of a gradual improvement in the tempo of business activity in the country which, going forward, would gather momentum and help the economy to deliver growth which is significantly better than last year," he said.

Nineteen of the 23 industry groups in the manufacturing sector recorded positive growth in June. It was led by the manufacturing of computers, electronic and optical products, which grew 44 percent, followed by the production of motor vehicles, trailers and semi-trailers that rose 20.5 per cent over last year.

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