New Delhi: Showing signs of recovery, factory output rose to a two month high of 4.1 per cent in April driven by manufacturing, but retail inflation too edged up in May amid worries over deficient monsoon.
Earlier in the day, Finance Minister Arun Jaitley had said economy was recovering, though he was keeping his fingers crossed about monsoon.
As per the data released by the government, factory production measured on Index of Industrial Production (IIP) grew by 4.1 per cent in April as against 3.7 per cent in the year ago period and 2.5 per cent compared with the preceding month.
Manufacturing output, which constitutes over 75 per cent of the index, grew at higher rate of 5.1 per cent in April as against 3 per cent in the same month last year.
The production of capital goods, a barometer of demand, however, grew at a slower pace of 11.1 per cent in April as against 13.4 per cent in the same month last year.
Along with IIP, the Ministry of Statistics & Programme Implementation also issued the data on retail inflation gauzed on Consumer Price Index (CPI).
The CPI, which had dipped to a four month low in April, inched up to 5.01 per cent in May despite drop in rate of price rise in the food basket.
Prices of pulses rose by 16.62 per cent in May over the same month last year, the CPI release said.
On Tuesday, the government had announced to import pulses to check rising price of pulses.
FICCI President Jyotsna Suri said the manufacturing growth "seems to be gaining momentum now" as is evident from the healthy growth of key sectors like capital goods and also from the fact that growth is more diversified.
Alok B Shriram, President, PHD Chamber of Commerce and Industry said that significant growth of consumer durables from (-)4.8 per cent in March to 1.3 per cent in April suggests the demand is picking.
Ratings agency ICRA said: "The marginal uptick in CPI...Is in line with our expectations, given the considerable upward revision in fuel prices during that month.
"Following the rate cut in the June...We expect an extended pause until the extent of the monsoon shortfall and its impact on food inflation become clear."
"The strong output performance of industry is an indication that recovery is firmly taking roots and turnaround in the investment cycle is imminent," said Chandrajit Banerjee, Director General of CII.
The Reserve Bank, which tracks retail inflation as a benchmark for its monetary policy, earlier this month said that price rise was still a worry for the bank as it expects inflation to rise to 6 per cent by January.
Observing that the economy is recovering from the serious challenges it has faced in past few years, Jaitley said, "We can take some satisfaction of the fact that even though international agencies are rating us as perhaps the fastest growing among emerging economies, but our own level of ambition is higher."
He said the basic fiscal data looks good and the economy is on a roadmap for much higher growth.
In April this year, mining sector too grew at a slower rate. The growth was 0.6 per cent as against 1.7 per cent in April last year.
On the other hand, electricity output contracted by 0.5 per cent, while it had expanded by 11.9 per cent April 2014.
In terms of industries, 16 out of the 22 industry groups in the manufacturing sector have shown positive growth during April compared with the corresponding month previous year.
