Industrial output rebounds in January, grows at 6.8 percent

Helped by a robust show by the manufacturing sector, especially consumer goods, India’s industrial output in January expanded at a fast paced 6.8 percent when compared to the sluggish rate in the past few months, official data released Monday showed.

In the previous month, the index of industrial production (IIP) — a barometer of factory production — grew at a snail’s pace at 1.8 percent, underlining the slowdown in the economy and putting pressure on policymakers to take steps to stem the fall.

For the April-January period, the IIP has grown at a slow 4 percent.

The IIP has been on a see-saw trend. It contracted by 5.1 percent in October, before expanding by 5.9 percent in the next month. But data for December showed the barometer plunging to a slow 1.8 percent.

The industry has been clamouring for interest rate easing. In response, the Reserve Bank of India cut the cash reserve ratio by 75 basis points last week and 50 basis points in January, bringing much needed liquidity in the market.

But a rate cut may not happen till April when the apex bank spells out the monetary policy for 2012-13.

According to data released Monday by the Ministry of Statistics and Programme Implementation, consumer goods saw a huge 20.2 percent rise in January.

However, capital goods production continued to slip. It was logged at minus 1.5 percent in the month under review, having fallen by a whopping 16.5 percent in the previous month.

Manufacturing, which is a major constituent of the IIP, expanded by 8.5 percent in January, but the mining sector’s output contracted by 2.7 percent. Electricity generation was moderate at 3.2 percent.