The June Index of Industrial Production (IIP) came in at 7.8% as against 5.4% year on year and 2.7% month on month.
Deputy Chairman of the Planning Commision Chairman Montek Singh Ahluwalia said, "We have been maintaining for a long time that the worst is behind us." Montek, however, cautioned against excess optimism, especially because the lean June monsoon had resulted in greater-than-normal activity in the construction sector. “Let's not count too many chickens before they hatch."
Atsi Seth of Reliance Equity said that the IIP numbers were way ahead of expectation and this recovery was led mainly by the growth in consumer durables. However, she said, it doesn’t change it radically, there is some inventory buildup happening.
“I think industry will probably be cautious – at the same time within certain sectors certainly demand looks like its going to sustain and that’s where you’ll see capex expanding but not across the board for sure as of now given what we know about future consumption growth which is the monsoon is likely to dampen and also cost of capital which is not likely to fall as low as it did in the last cycle.”
Sonal Varma, India Economist with Nomura Financial Advisories said there were two key that have driven this increase. One was the governments’ own spending that is driving a lot of rural demand and secondly she said, “This is a quarter where we have seen a lot of inventory rebuilding, so these two factors combined have been the big reason for the surprise.”
Industry Reacts:
K Ravi Kumar, CMD of BHEL said the double digit growth definitely gives a feeling that the economy has started bouncing back. He sees definite improvement in the second and third quarters. “Our industry is growing at a rate of 25-30%, we had a 30% of growth last quarter and over the years we are quite confident that we will reach a figure of 35-30% growth in sales.”
V Ramachandran, Head Director of Marketing with LG said he expected the overall trend of strong growth to continue right through the year on the back of good consumption. “The overall growth will remain very strong; our internal growth rates are much higher than what IIP is reflecting, so currently for example if you look at the last three months we are growing overall at about 30%.”
source: MC
- Manufacturing growth at 7.3% versus 6.1% (YoY)
- Mining growth at 15.4% versus 0.1% (YoY)
- Capital goods growth at 11.8% versus 7.8% (YoY)
- Electricity growth at 8% versus 2.6% (YoY)
- Consumer durable goods growth at 15.5% versus 4.6% (YoY)
- Consumer non-durable goods growth At 0.3% versus 11.6%
- Meanwhile the May IIP number has been revised downward from 2.7% to 2.2%.
Deputy Chairman of the Planning Commision Chairman Montek Singh Ahluwalia said, "We have been maintaining for a long time that the worst is behind us." Montek, however, cautioned against excess optimism, especially because the lean June monsoon had resulted in greater-than-normal activity in the construction sector. “Let's not count too many chickens before they hatch."
Atsi Seth of Reliance Equity said that the IIP numbers were way ahead of expectation and this recovery was led mainly by the growth in consumer durables. However, she said, it doesn’t change it radically, there is some inventory buildup happening.
“I think industry will probably be cautious – at the same time within certain sectors certainly demand looks like its going to sustain and that’s where you’ll see capex expanding but not across the board for sure as of now given what we know about future consumption growth which is the monsoon is likely to dampen and also cost of capital which is not likely to fall as low as it did in the last cycle.”
Sonal Varma, India Economist with Nomura Financial Advisories said there were two key that have driven this increase. One was the governments’ own spending that is driving a lot of rural demand and secondly she said, “This is a quarter where we have seen a lot of inventory rebuilding, so these two factors combined have been the big reason for the surprise.”
Industry Reacts:
K Ravi Kumar, CMD of BHEL said the double digit growth definitely gives a feeling that the economy has started bouncing back. He sees definite improvement in the second and third quarters. “Our industry is growing at a rate of 25-30%, we had a 30% of growth last quarter and over the years we are quite confident that we will reach a figure of 35-30% growth in sales.”
V Ramachandran, Head Director of Marketing with LG said he expected the overall trend of strong growth to continue right through the year on the back of good consumption. “The overall growth will remain very strong; our internal growth rates are much higher than what IIP is reflecting, so currently for example if you look at the last three months we are growing overall at about 30%.”
source: MC
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