Factory output grows at highest in 9 months
MORE GREEN SHOOTS Manufacturing sector boosts IIP by 5% in Feb, signals industrial revival, uptick in investments TAKE-OFFS AND CRASH LANDINGS AVIATION’S INDIAN FLIGHT PATH
NEW DELHI: India’s factory output grew by 5% in February — the highest in nine months — rekindling hopes of an industrial rebound buoyed by a robust manufacturing sector, latest data released on Friday showed.
Factory output had contracted by 2% a year-ago It grew by 2.8% in January this year.
Capital goods output, a broad gauge to measure investment activity, grew by 8.8% in February, compared to a contraction of 17.6% in the year-ago period, in what could be signs that companies are adding new capacities.
Manufacturing, which constitutes over 75% of the index of industrial production (IIP), grew by 5.2% in February, compared to a 3.9% fall in output a year-ago.
Finance minister Arun Jaitley, in his maiden full budget in February, had announced a raft of measures, including capital support and tax breaks for small industries, amid hopes that these would breathe life into the waning industrial sector and spin jobs.
Household spending showed signs of revival with consumer durables output inching towards the positive territory (-3.4%) in February compared to a contraction of 9.8% in the year-ago period.
“Mining and manufacturing sectors appear to have picked up pace. This is reflective of policy actions in terms of faster clearances of projects. The pickup in manufacturing activity is also suggestive of rising demand,” Care Ratings said in a report.
Many banks have cut lending rates in last two days, paving the way for cheaper borrowing costs for companies and households. PUNE: Reserve Bank of India governor Raghuram Rajan said on Friday that India is “fairly” open on capital inflows and hoped that there would be full capital account convertibility in a short period.
“The only place today that we have some restrictions is inflows into debt, especially very short term debt,” Rajan said. “I think that most people would agree that opening up to short term debt flows is usually not very clever for reasons of financial stability. My hope is that we will get to full capital account convertibility in a short number of years.”
Rajan was responding to questions posed by students at the Gokhale Institute of Politics and Economics in Pune.
Full capital account convertibility typically implies no restrictions on the amount on cross-border movement of currency. So far, India only allows current account convertibility, where forex is available for imports and exports.
In his address, Rajan also criticised the easy money policies adopted by many developed countries after the financial crisis. He said such policies were only leading to huge debt, and some developing countries were also getting affected.
He pointed to the high debt in China and also rising household debt in Brazil. Thankfully, India is still unaffected, he said.
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