The Indian economy has started to show signs of recovery, with the country's industrial output increasing to a 16-month-high of 7.8% in June, as compared to 5.44 per cent in the same period last year.

Dr Pronab Sen, Chief Statistician of India, said: "A 7.8 percent is way above our expectation. While there have been signs of economic pick-up, 3.5-4 per cent growth was what we were anticipating."

Overall growth in IIP is led by contributions from three major economic components. The manufacturing index grew 7.27 percent as compared to 6.14 percent in the corresponding period last year. Mining segment too reported impressive growth of 15.43 percent, stimulated by gas production from Reliance Industries' recently commissioned Krishna-Godavari D-6 fields.

Harsh Pati Singhania, President, FICCI said: "The IIP figure does no longer look like a flash in the pan. It appears to be an indication of a turnaround in the industrial economy. I believe this is a turnaround because this growth has been registered at a time when our exports have been shrinking."