July IIP numbers receive mixed reviews from experts

The IIP data for July, released today received a mixed response from the experts. After contracting for two straight months, industrial production entered the positive zone in July, recording a growth of 2.6 per cent on account of improved performance of manufacturing and power sectors.

Calling the July IIP number significantly better, Gaurav Kapur, Senior Economist, RBS, said that the data was better than what he was expecting. Giving his views on the CPI inflation data, Kapur said that the inflation number was largely in line with expectation. Terming the inflation number of 9.52% as sticky, the RBS economist said that the 9.5% range was largely on account of food prices. He further said that this would further translate into the WPI number which is due Monday, Sepetmeber 16, 2013.

Commenting on the July capital goods growth number of 15.6% vs -5.8% in June, MS Unnikrishnan, MD & CEO, Thermax, said that no doubt 15.6% is a big number, it did not reflect the actual picture of the industry. "What you see as a 15 point odd percent number for the month is a revenue recognition done by companies, not the new orders taken", said Unnikrishnan. He further said that the number was reflective of the orders taken about a year and more back and had nothing to do with recent past.

Taking the point of expansion in the capital goods segment further, Saugata Bhattacharya, Economist, Axis Bank said that it was dificult to extrapolate one number for the rest of the year. He also mentioned that a part of the growth in numbers can be attributed to base effect. He was however optimist of the future and said steep deperciation of rupee was making companies source capital goods domestically rather than importing them.