July industrial output grows 4.2%, India Inc pitches for rate cut

With industrial output growing at 4.2 per cent in July, India Inc said it indicates a revival in industrial activity and reiterated the demand for a rate cut by the RBI to provide a fillip to industrial growth.

With prices seemingly under control, the monetary authority must focus on ensuring that cost of finance to the industry becomes competitive. This would surely help build the growth momentum. RBI, in its upcoming policy, must give due consideration to providing further fillip to the industrial growth and announce at least 25 basis points rate cut, Assocham President Rana Kapoor said.

"The industrial production had grown by 0.9 per cent in July last year. There is a potential to take this growth to a higher level with the help of more supportive policies for stimulating domestic demand and exports," Ficci President Jyotsna Suri said.

"It is encouraging to see the positive growth in manufacturing over the last few months and we hope that this growth and demand will pick up as we are nearing the festive season," Suri said.

"Overall, a positive number for the industries and we expect some more improvement in the second half of the current fiscal year," said Rishi Shah, Economist, Deloitte.

Industrial growth, measured in terms of the Index of Industrial Production (IIP), was at 3.5 per cent in April-July period against 3.6 per cent in the year-ago period, the data released by the Central Statistics Office (CSO) showed. Moreover, the IIP growth for June has been revised upwards to 4.36 per cent from provisional estimate of 3.8 per cent released last month.

The manufacturing sector, which constitutes over 75 per cent of the index, grew by 4.7 per cent in July 2015 against a contraction of 0.3 per cent in the same month last year. The output of capital goods, a barometer of investment, grew at an impressive rate of 10.6 per cent against a contraction of 3 per cent in the same month last year. The mining sector growth was at 1.3 per cent in July against 0.1 per cent in the same month last fiscal.

Power generation growth slowed to 3.5 per cent in July compared to 11.4 per cent in the same month a year ago. The consumer durables goods output expanded at 11.4 per cent in July compared to a contraction of 20.4 per cent in the month a year ago. Overall consumer goods output rose by 1.3 per cent in July compared to a contraction of 5.9 per cent in the month a year ago. In terms of industries, 12 out of 22 groups in the manufacturing sector showed positive growth in July.