Some ray of hope sparked up when the core sector numbers for September sprang a suprise and showed that the sectors grew by a whopping 8%, a year high.
This was on the back of double digit growth in three of the eight infrastructure sectors -- electricity (12.6%) , cement (11.5%) and coal (12.5%). The core sectors contribute around 38% to the Index of Industrial Production (IIP).
Experts feel that though this is positive but the trend has to be sustained to term it as a recovery. "It is a good sign but we need to wait for the growth to remain so for next 2-3 months", said Anis Chakravarty, senior director at Delloitt India.
Experts argue that core numbers are usually volatile. "Core sector remain volatile and does not mean that this will continue for the next months", said D K Joshi, chief economist of Crisil.
However, some said that as the base of the same month of 2012 was also high (when the core sectors expanded 8.3%), the numbers do symbolise first indicator to green shoots.
"Had the base been low, we could say that this was a result of that but despite a high base, if growth is 8% then it means there is some industrial recovery taking place", said Madan Sabnavis, chief economist at CARE Ratings.
Sabnavis said that the result of government spending on infrastructure is now being reflected. This, he said could be witnessed through bank credit growth as well which surged in September. The non-food bank credit increased by 18.2% in September 2013 as compared with 15.9% growth in September last year.
"This means that industries, both small and large, are raising funds to invest", said Sabnavis.
However, some experts said that as commercial paper borrowings are costlier, industries are turning to the banks to borrow funds. "The reason the credit growth is high is because of comparatively cheaper interest rates through banks", said Devendra Pant, chief economist at India Ratings.
Sabnavis said that even interest rates of commercial banks are high but still credit growth is healthy.
Pant was also of the view that core sector and the IIP data needs to be watched for the coming months. "To term it as recovery could be misleading", said Pant.
Chakravarty said that this may be a result of a pre-festive mood. "This may be seasonal growth we do not know yet. We have to wait for IIP data for the coming months and there has to be a consistency", said Chakravarty.
Pant also said that last year as well this happened when core sector expanded at a good pace but that was not consistent. In September last year, the core sector had recorded 8.3% growth, the highest since January 2009-10. However, in the subsequent months, these infrastructure sectors went up by below 5%.
Even these numbers were not reflected in the IIP in 2012 as the industrial output contracted 0.7% in September last year. In the previous month, the industrial activity remained almost stagnant as it witnessed a sluggish growth of 0.6%.
Sabnavis said a lot depends on the private sector now who will be the main drivers of growth. "The finance ministry has consistently said that it will not breach the 4.8% fiscal deficit target and hence there will be no government spending as such", he said. The fiscal deficit touched 76% of the Budget Estimates already in the first half of the year.