Factory output rises 3.4% in April

The industrial growth rebounded in April from two straight months of contraction to expand 3.4 per cent year-on-year, its fastest pace since March 2013, official figures released on Thursday showed.

Industrial production shrank 0.1 per cent in the fiscal year that ended in March dragging down the overall economic growth rate below five per cent for the second year in a row. The numbers come as a good sign for the new government, headed by Prime Minister Narendra Modi, which is looking at stepping up investment to rev up the economy.

Data released by the Central Statistics Office showed that capital goods, which reflect the amount of investment taking place in the economy, expanded for the first time in five months to clock an annual growth of 15.7 per cent.

There was also some revival in the scam-hit mining sector, which has been contracting in earlier months. Expectations of an investment-led economic turnaround after Modi's victory have seen foreign capital pouring into the stock markets taking the total market cap of Indian listed companies to over $1.5 trillion for the first time.

The industrial production data, coming on the heels of the sharpest growth in merchandise exports in May, are expected to further boost investor sentiment. Manufacturing grew 2.6 per cent in April compared to a grow th of 1.8 per cent a year earlier. The mining sector grew by 1.2 per cent in April as against a dip of 3.4 per a year earlier. Power generation increased by 11.9 per cent in April. "The higher-thanexpected IIP growth in April 2014 benefited from a sharp turnaround in the performance of capital goods," said Icra senior economist Aditi Nayar.