India Inc. hails the strong industrial production figures for the month of January 2010, which have raised hope amid speculation about partial roll back of the fiscal stimulus measures given during the last two years to combat the slowdown.

"Partial rollback of fiscal stimulus proposed in the current budget may not significantly impact the robustness of industrial recovery," said the Confederation of Indian Industry on Friday, reacting to the 16.7 percent industrial growth in January.

However, the industry body added, "Any increase in policy rates at this time will be counter-productive to industrial recovery where a significant portion of the sector are SMEs".

Performance of some of the labour intensive sectors such as the jute and leather sectors are still worrisome and recent strong figures in industrial production has been primarily contributed by manufacturing sectors, capital goods and consumer durables, said CII Director General Chandrajit Banerjee.  

He also pointed out that a strong base effect is evident in the recent growth numbers and industrial recovery has been strengthening due to the positive impact of stimulus packages both on fiscal and monetary front.  

Meanwhile, the Federation of Indian Chambers of Commerce and Industry (FICCI), viewed that the recent  IIP growth for January confirms that the industrial recovery is taking firmer hold.  

"What is noticeable from the disaggregated IIP figures this time is that the mining registered a growth of 14.6 percent in January 2010 compared to 9.5 percent during the previous month (December 2009)," said FICCI Secretary General Amit Mitra.

He added that  the derived demand for metal from the manufacturing sector must have pushed up the pace of mining sector.

The strong performance of the manufacturing sector harbours the potential to spread to the rest of the industrial economy, Mirta said adding that if current trend is sustained over the next few months, the industrial sector would contribute significantly more to the overall growth rate.

"The strong performance of the manufacturing sector harbours the potential to spread to the rest of the industrial economy," the FICCI chief added.

Another industry body, the Associated Chambers of Commerce and Industry of India (ASSOCHAM), said that the recent industrial figures show that recovery in Indian economy is getting gradually more pronounced, and if the current trend goes on, India would be able to achieve the GDP growth rate of 7.5% in current fiscal and 9% by the end of 11th Plan period.

Mining, manufacturing and electricity sector contributed to industrial production for the month of January 2010, said ASSOCHAM President Swati Piramal, adding that this trend would broad base in coming months.   

Commenting on the IIP data, Finance Minister Pranab Mukherjee Friday said, "For the two consecutive months, there has been high growth. Perhaps, it indicates that the manufacturing sector is going to make substantial contribution to growth and it (the economy) is on the path of fast recovery."