India industrial sector surprises with return to growth

September 12, 2013 2:55 pm
Indian labourers work at a steel factory in the outskirts of Agartala on November 1, 2012/AFP
Indian labourers work at a steel factory in the outskirts of Agartala on November 1, 2012/AFP

, NEW DELHI, September 12- Indian industrial production grew a surprise 2.6 percent in July on an annual basis, official data showed Thursday, snapping two months of contraction that underlined plummeting output in Asia’s third largest economy.

The preliminary monthly figures were the strongest since March, but still a far cry from the double digits enjoyed for large parts of the last decade when the South Asian giant was booming.

India’s economy has slowed dramatically, expanding just 5.0 percent last year in its weakest annual growth in a decade, with the rupee at near record lows against the dollar.

Manufacturing output in July increased by 3.0 percent compared with the same month last year, production of capital goods rose 15.6 percent, while the troubled mining sector posted another 2.3-percent contraction.

Analysts had forecast another decline and some of them downplayed Thursday’s better-than expected data.

“Investment is yet to recover. I would not read too much into these numbers unless we see a slightly sustained trend in recovery,” said Dharmakirti Joshi, chief economist with credit rating agency Crisil.

Sonal Varma, India economist with Nomura Securities, said that economic growth was still weak, “so the sharp jump in capital goods growth appears a bit odd”.

The industrial output figure for June was revised to show a contraction of 1.8 percent instead of a 2.2 percent decline initially reported last month.

India’s rupee closed at 63.50 against the dollar on Thursday, after reaching record lows of more than 68 to the dollar last month.


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