Mumbai: Industrial production in the country grew at a faster rate of 7.1 per cent in July - the highest so far in fiscal 2008-09 -  gaining from higher production of capital goods and consumer durables, giving credence to the view that the economy will grow at a higher rate despite the current blip.

Quick estimates of the index of industrial production (with base 1993-94) for July 2008 stood at 273.0, which is 7.1 per cent higher as compared to the level in July 2007.

Cumulative growth for April-July 2008-09 was 5.7 per cent over the corresponding period of the previous year, according to data released by the Central Statistical Organisation of the ministry of statistics and programme implementation.

The indices of production for the `mining, manufacturing and electricity' sectors for the month of July 2008 stood at 164.9, 293.3, and 225.9 points respectively, with the corresponding growth rates of 5.0 per cent, 7.5 per cent and 4.5 per cent.

The cumulative growth during April-July 2008-09 over the corresponding period of 2007-08 in the three sectors have been 4.5 per cent, 6.1 per cent and 2.6 per cent respectively, which moved the overall growth in the general index to 5.7 per cent.

In terms of industries, as many as 10 out of the 17 industry groups (as per 2-digit NIC-1987) have shown positive growth during July 2008 as compared to the corresponding month of the previous year. The industry group 'beverages, tobacco and related products' have shown the highest growth of 28.6 per cent, followed by 18.7 per cent in 'transport equipment and parts' and 16.0 per cent in 'machinery and equipment other than transport equipment'.

On the other hand, the industry group 'wool, silk and man-made fibre textiles' have shown a negative growth of 9.2 per cent followed by 9.1 per cent in 'wood and wood product: furniture and fixtures' and 4.9 per cent in 'leather and leather & fur products'.

As per use-based classification, the sectoral growth rates in July 2008 over July 2007 were 5.9 per cent in basic goods, 21.9 per cent in capital goods and 1.6 per cent in intermediate goods. The consumer durables and consumer non-durables have recorded growth of 11.2 per cent and 6.1 per cent respectively, with the overall growth in consumer goods being 7.3 per cent.

The CSO has also revised IIP figures for June 2008 in the light of updated data received from the source agencies. (These indices shall undergo final (second) revision in October 2008).

This is the best monthly growth in the current fiscal and by some estimates industrial production may pick up further in the coming festival months and with rising income of over 4.5 million government employees who stands to benefit from the award of the sixth pay commission this month onwards.

Although analysts are divided over the chances of the Reserve Bank raising interest rates further or in some way putting curbs of credit expansion against the backdrop of a fall in inflation rate over the last three consecutive months in August, the Confederation of Indian Industry (CII) feels that the recovery in IIP growth to 7.1 per cent in July as compared to 5.2 per cent during April-June '08 as quite encouraging.

''This recovery reinforces CII projection of GDP growth of above 8 per cent for 2008-09'' the said in a statement, adding that the double-digit growth in both capital and consumer durable goods is a sign of healthy investment and consumer spending in the economy. Higher infrastructure sector growth in July also shows that the Indian growth story is still very much intact.
 
The resurgence in growth of mining and manufacturing sector highlights the point that moderated growth registered during the first quarter was not the beginning of a sustained slowdown.

Manufactured goods constitute around 20 per cent of India's economic output and account for nearly two-thirds of the wholesale price index (WPI).

Capital goods and consumer durables were the two top performers in July 2008, posting a growth rate of 21.9 per cent over 12.3 per cent same month last year and 11.2 per cent as against a decline of 2.7 per cent respectively.