Even as the deficient monsoon threatens to derail economic growth, the industrial production clocked in an impressive 7.8 per cent growth in June -- the maximum in 16 months -- showing signs of revival in the economy. The effect of the stimulus packages provided by the government has reflected in the manufacturing sector, which recorded a growth of 7.3 per cent in June indicating return of consumer demand in the market. Consumer durables and capital goods grew by 15.5 per cent and 11.8 per cent, respectively - the strongest expansion in several months.Though policy advisors called the figures a `sign of a turnaround in the economy', some analysts cautioned such high growth may not sustain in the coming months. Analysts expect the upward trend in consumption and investment demand to continue, while the improved financial conditions are expected to mitigate the adverse effects of scanty rains and lower crop sowing on the economy.
The index of industrial production (IIP) has shown the highest growth since February 2008, when it rose 9.5 per cent. "High growth in India's capital goods sector is a sign of turnaround in the economy and the positive trend in industrial output will continue," finance secretary Ashok Chawla said . After three months of contraction, the capital goods index grew at 11.8 per cent in June 2009. Electricity too grew at 8 per cent during the month. Mining expanded the most since June 1995 at 15.4 per cent in June 2009. This was because the coal sector output grew annually by 15 per cent in June 2009, the most in over two year. Consumer durables grew at a healthy 15.5 per cent during the months.
The cumulative growth for April-June 2009 stood at 3.7 per cent as compared to the same period last year. The industrial growth rate for May 2009 was revised down to 2.2 per cent from 2.7 per cent.