India’s industrial growth accelerated in January while inflation eased for the second month running in February, providing a twin boost to the economy and suggesting overall economic growth could accelerate further from the five-quarter high recorded in the October-December period.
Industrial production growth rose higher than expected to 7.5% in January from 7.1% in the previous month, data released by the government showed, on the back of strong manufacturing. The simultaneously released Consumer Price Index (CPI) showed a further decline in retail inflation to 4.44% in February from 5.1% in the previous month.
“This looks like an early sign of industrial revival,” said Devendra Kumar Pant, chief economist at India Ratings, a Fitch Group company. “It looks like post demonetisation and goods and services tax (GST) implementation, finally the industrial sector is gaining traction.” India reclaimed the title of fastestgrowing major economy in the October-December quarter by recording 7.2% growth compared to China’s 6.8%.
This is the third successive month of 7%-plus industrial growth in India. The economy is forecast to grow 6.6% in the current year, though with growth picking up, the final number could be higher. “Three successive months of growth is proof enough that we have recovered. This indicates sustainability to an extent,” said Madan Sabnavis, chief economist at CARE Ratings.