India’s industrial sector will continue to improve: Moody’s

June 12th, 2009 - 5:19 pm ICT by IANS  

New Delhi, June 12 (IANS) The rise in India’s industrial production in April points to stabilisation of the industrial sector, which will continue to grow in coming months, says the economic intelligence arm of global rating agency Moody’s.
The Index of Industrial Production (IIP) rose 1.4 percent in April as against a decline of 0.75 percent in March, data released here Friday by the government said.

“In coming months, industrial production will likely continue to show signs of improvement,” Nikhilesh Bhattacharyya, associate economist with Moody’s, said.

According to him, the government’s infrastructure projects, recovering confidence, accommodative monetary policy and the recent rebound in commodity prices will help stimulate production.

“Already, the recent rise in commodity prices has led to increased production in mines, while recovering domestic demand has led to electrical production recovering,” Bhattacharyya said, hoping that these trends would likely continue.

Though the demand for consumer goods remains weak, this has been offset by the government’s infrastructure and construction projects, Moody’s said.

Bhattacharyya added that the recent fall in interest rates helped boost demand in the housing and construction sector.

The consumer durable goods sector registered 16.9 percent growth in output during the month, while the non-durables’ output fell 10.4 percent.

The surge in consumer durables production is “quite a surprise”, Bhattacharyya said, adding that the major reason behind this would be lower interest rates.

The durable goods sector has also been aided by major discounts offered by retailers to induce consumers and stimulate demand.

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