"While 7.5% industrial growth for January looks quite good and the IIP expansion beyond 7% for the last three months gives additional boost to the sentiment, it would be safe to assume that a lot of advantage has accrued because of the low base effect of the previous year when the growth had plunged following the demonetisation", said industry body Assocham, adding, "We can see an underlying pick up in the growth trajectory".
India's factory production grew in January to 7.5% over the same month past year, and marginally over the 7.1% recorded in December 2017, official data showed on Monday.
Consumer food prices rose 3.26 per cent in February, compared with 4.70 per cent in January, as prices of pulses fell more than 17 per cent from a year earlier. Inflation for the fuel and light category was at 6.80 per cent in February against 7.73 per cent in January.
While the price rise in food segment was 3.26% in February, it was 17.57% in vegetables.
In December, the index of industrial production (IIP) grew 7.1%, while consumer price index (CPI)-based inflation had slowed to 5.1% in January.
The IIP growth in January this year was mainly on account of uptick in manufacturing sector which constitutes 77.63 percent of the index.
What sets apart IIP growth in January is the strong growth registered in consumer durables, at 8% compared with 1.4% in the previous month.
The consumer food price index (CFPI) stood at 3.26% during the month, lower compared to 4.70% of January 2018, but way higher from 2.01% of year ago same month. "This is the third consecutive month in which factory output has clocked a high single digit growth". Capital goods, which point to rising investment demand in the economy, recorded positive growth for the sixth straight month, growing at 14.6%, signalling a revival in private investment. In terms of industries, 16 out of 23 industry groups in the manufacturing sector showed positive growth during January, 2018.
Mining activity's growth further plummeted, growing 0.1 percent in January following December's trend at 1.2 percent, as compared with a robust growth of almost 8.6 percent a year ago.
According to Devendra Pant, Chief Economist at India Ratings, robust growth of consumption-related sectors will provide stability of Gross Domestic Product (GDP) growth in the next financial year as private final consumption expenditure (PFCE) is the biggest component while calculating GDP.