Industrial production in November 2009 recorded a two year high growth rate of 11.7 per cent amid signs of an economic turnaround.

The growth in index of industrial production (IIP) was mainly due to the low base effect and the demand generated by the stimulus. Manufacturing recorded a growth of 12.68 per cent in November as against 2.7 per cent last year.

In November 2009 sub index of manufacturing, Consumer durables recorded a 37.3 per cent growth against 0.3 per in November 2008, while capital goods for the same period grew12.2 per cent against 0.5 per cent in the same period last year.

Among other segments Consumer goods grew 11.06 per cent however Consumer non-durables dropped 3.14 per cent against 12.4 per cent November 2008. Mining and electricity both grew 9.97 per cent and 3.28 per cent, respectively. The Intermediate goods expanded by 19.4 per cent.

Montek Singh Ahluwalia, the Deputy Chairman of the Planning Commission indicated that the growth for this fiscal year in IIP would be more than that of the last year. The growth rate of IIP for November 2008 was 2.5 per cent and 10.35 per cent for October 2009.

The rate of growth for the first eight months of the fiscal stood at 7.6 per cent against 4.1 per cent a year ago making many believe that the rate would be better for the whole fiscal from last year.

Analysts believe that the impact of government measures and low base effect are the main reasons for the high growth numbers however many also agree that a sudden withdrawal of stimulus should be avoided. The industry chamber, Federation of Indian Chambers of Commerce (FICCI) has also urged the government not to withdraw stimulus at the moment.

Many analysts see the rising oil prices and the effects of a lower kharif output on rural consumption as major challenges to the economy. They are also doubtful whether such high figures are sustainable.