NEW DELHI: India’s factory output grew in December, having contracted in the previous month, indicating a gradual recovery in industrial activity from the pandemic-induced disruption.
Data released by the statistics office showed that the index of industrial production (IIP) grew 1% in December compared with a 1.9% contraction in November. Manufacturing output grew 1.6% while mining production contracted 4.8% during the month under review.
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Among use-based industries, capital goods, an indicator of investment demand in the economy, grew 0.6% while consumer durables grew a robust 4.6%.
In a positive surprise, the Indian economy had contracted 7.5% during the September quarter, much slower than the record 23.9% decline seen during April-June in the immediate aftermath of the coronavirus pandemic. The GDP is officially projected to contract a record 7.7% in FY21, a first in 41 years, with the National Statistical Organisation assuming 0.6% growth in the second half (October-March) of FY21.
The Reserve Bank of India in its latest monetary policy statement said the outlook on growth has improved significantly, with positive growth impulses becoming more broad-based, and the rollout of the vaccination programme in the country auguring well for the end of the pandemic.
“Rural demand is likely to remain resilient on good prospects of agriculture. Urban demand and demand for contact-intensive services is expected to strengthen with the substantial fall in COVID-19 cases and the spread of vaccination. Consumer confidence is reviving and business expectations of manufacturing, services and infrastructure remain upbeat,” the central bank had said.
It had also said that the fiscal stimulus under AtmaNirbhar 2.0 and 3.0 schemes of government will likely accelerate public investment, although private investment remains sluggish amidst still low capacity utilisation. The Union Budget 2021-22, with its thrust on sectors such as health and well-being, infrastructure, innovation and research, among others, should help accelerate the growth momentum.
“Taking these factors into consideration, real GDP growth is projected at 10.5% in 2021-22 – in the range of 26.2-8.3% in H1 and 6.0% in Q3,” the RBI had added.