Reuters reports that India’s industrial output grew at its fastest pace in five years this October, propelled by manufacturing – factory output, utilities and mines grew 9.8 percent, its fastest pace since October 2010. Soumya Kanti Ghosh, chief economic advisor at state-held State Bank of India, reckoned that this data was likely to push overall economic growth for the year ending in March 2016 above 7.5 percent. “The base effect has played a role, but there is also a sequential momentum for manufacturing driving the index of industrial production, which is a good sign,” Ghosh said.
The goods and services tax, a crucial legislation that will add up to two percentage points to economic growth by replacing multiple federal and state tax levies, has been stalled in the parliament, and a lasting industrial recovery is less likely without fixing such structural bottlenecks said Shilan Shah, an economist at Capital Economics. Consumer demand grew 18.4 percent in October compared with a fall of 18.2 percent a year ago, and capital goods, a barometer of investments, surged 16.1 percent from a year earlier.