Industrial growth, measured in terms of the index of industrial production (IIP), was at 3.5 per cent in April-July period against 3.6 per cent in the year-ago period, data released by the Central Statistics Office (CSO) on Friday showed. Moreover, the index of industrial production growth for June has been revised upwards to 4.36 per cent from <g data-gr-id="41">provisional</g> estimate of 3.8 per cent released last month.
The manufacturing sector, which constitutes over 75 per cent of the index, grew by 4.7 per cent in July 2015 against a contraction of 0.3 per cent in the same month last year. The output of capital goods, a barometer of investment, grew at an impressive rate of 10.6 per cent against a contraction of 3 per cent in the same month last year. The mining sector growth was at 1.3 per cent in July against 0.1 per cent in the same month last fiscal. Power generation growth slowed to 3.5 per cent in July compared to 11.4 per cent in the same month a year ago.
The consumer durables goods output expanded at 11.4 per cent in July compared to a contraction of 20.4 per cent in the month a year ago. Overall, consumer goods output rose by 1.3 per cent in July compared to a contraction of 5.9 per cent in the month a year ago. In terms of industries, 12 out of 22 groups in the manufacturing sector showed positive growth in July.
The Government said that improvement in <g data-gr-id="39">index</g> of industrial production (IIP) data for July to 4.2 per cent against 0.9 per cent in the year-ago period is in line with <g data-gr-id="40">steady</g> improvement in the economic growth. “July index of industrial production data consistent with steady improvement in gross domestic product (GDP) numbers,” Economic Affairs Secretary Shaktikanta Das tweeted.
He added that the index of industrial production data for capital goods and manufacturing sectors are “noteworthy”. The index of industrial production data released by the Central Statistic Office (CSO) revealed that the growth in factory production jumped to 4.2 per cent in July as against 0.9 per cent in the year-ago period. The June index of industrial production number too has been revised upwards to 4.36 per cent from the earlier estimate of 3.8 per cent. The manufacturing sector, which constitutes over 75 per cent of the index, grew by 4.7 per cent in July 2015 against a contraction of 0.3 per cent in the same month last year.
The output of capital goods, a barometer of investment, grew at a rate of 10.6 per cent against a contraction of 3 per cent in the same month last year. The gross domestic product grew at 7 per cent in the April-June quarter, up from 6.7 per cent recorded in the year-ago period. Das said in another tweet: “First quarter CAD at 1.2 per cent better than last year. Have to remain watchful.”
Quarterly CAD drops to 1.2% of GDP on services exports
The current account deficit narrowed to 1.2 <g data-gr-id="104">per cent</g> of GDP at $6.2 billion in the June quarter on contraction in <g data-gr-id="148">trade</g> deficit and higher earnings from services exports, the Reserve Bank said on Friday. The June quarter CAD figure is lower than $7.8 billion, or 1.6 <g data-gr-id="105">per cent</g> of GDP, in the year-ago period, but higher than 0.2 <g data-gr-id="106">per cent</g> for the March quarter. "This improvement is mainly on account of the merchandise trade deficit of $34.2 billion during the first quarter which contracted on year-on-year basis due to larger absolute decline in merchandise imports relative to merchandise exports," RBI said in the quarterly balance of payments data.
Rating agency <g data-gr-id="101">Icra's</g> senior economist Aditi Nayar said the improvement in CAD will bolster the rupee if there is a drop in sentiments related to emerging market currencies once the US Federal Reserve hikes rates. She added: "Lower CAD largely reflects the lower net outflow of primary income. The benefit of the steep reduction in crude prices was offset by higher imports of other items and a decline in exports."
The central bank further said that higher net earnings through services and lower outflow on account of primary income, which includes profit, dividend and interest, also aided in the narrowing of the current account gap.
There was a "marginal drop" in private transfer receipts, which primarily includes remittances by the diaspora, to $16.2 billion, for the reporting period, the RBI said. The net foreign direct investment inflows were up at $10.2 billion for the April-June period, as against $7.9 billion for the year-ago period, the central bank said.
The portfolio flows stood at a negative $2.3 billion for the period as against inflows of $12.4 billion a year ago, the RBI said, adding that this was almost entirely in the debt segment. The NRI deposits more than doubled to $5.9 billion on a year-on-year basis, it said.
Net loans availed by banks witnessed an inflow of $5.4 billion, mainly on account of a fall in foreign currency assets held abroad by banks, the RBI said. The net accretion to forex reserves was $11.4 billion on a BoP basis, which was marginally higher than $11.2 billion a year ago, RBI said. If we include the effects of currency valuations, there was a wider change in forex reserves for the June period, the central bank said, adding that it grew to $14.4 billion this year as against $11.9 billion last year.
External commercial borrowings were at a negative $1.3 billion for the period, as against $1.3 billion a year ago, the data showed. The CAD had narrowed to 0.2 <g data-gr-id="102">per cent</g> of GDP in the March quarter, its lowest in a year, as global oil prices slumped while foreign investments remained robust. The March quarter CAD was a stark turnaround from the record high of 4.8 <g data-gr-id="103">per cent</g> of GDP registered in FY13.