Industry to grow over 7% in Aug, near 9% in Oct

With the economy showing signs of recovery, industry would pick up further momentum with a growth of more than seven per cent in August and nearly nine per cent in October, economic think-tank IEG on Tuesday projected.

The Institute of Economic Growth also expected banks prime lending rates to decline to below 11 per cent in next few months which would further spur industry growth.

"The Index for Industrial Production has shown an impressive growth of 6.8 per cent (in July). This figure was slightly higher than the last year's growth. It is definitely a pointer towards the revival of industrial growth," the IEG said in its monthly monitor for the economy.

In fact, based on the available information we forecast the IIP growth rate for the next three months to be 7.08 per cent, 7.7 per cent and 8.9 per cent for August, September and October respectively.

The government will come out with its industrial production data for August on October 12.

After reversing a trend of industrial slowdown since the collapse of Lehman Brothers in the middle of September, industry grew by 8.2 per cent in June over the same month last year.

Industrial growth for the first four months of 2009-10 stood at 4.6 per cent against 5.6 per cent a year ago because of slow growth of 1.1 per cent in April and 2.2 per cent in May.

The Finance Minister Pranab Mukherjee had earlier said that the industrial output has started picking up and hoped the momentum would continue. Besides, Finance secretary Ashok Chawla was also of the view that revival in the industry would continue.

While commenting on the Reserve Bank's stance on the monetary measures, the institute said that it predicted a marginal decline in the Prime Lending rates in the next three months.

"Based on the data up to August 2009, we forecast that prime lending rates to decline marginally below 11 per cent," it said.

The central bank will come out with its policy review on October 27 where it could decide on the status of policy rates which would affect the prime lending rates offered by the banks.

Meanwhile, the inflation is expected to be 0.64 per cent for September, 1.02 per cent for October and reach a level of 1.59 per cent for November this year.