True, industrial growth for April-May at 6.3 per cent is not high; and it has been worked out over the low base of April-May last year when IIP had logged a mere 4.2-per cent rise. The point, however, is that growth in manufacturing, which became visible in Q4 last year, rose to 8.4 per cent in May (7.3 per cent in April-May).

More importantly, consider the expectations reflected in the zooming Sensex fuelled by demand for cyclical stocks like steel, cement, petro-chemicals and automobiles. Apart from the euphoria over Kargil, markets are betting on an on-going revivalof industrial economy.

It is difficult to answer the question - what is triggering growth? Obviously, the trigger has to be a demand upsurge. But according to IIP, output growth of consumer non-durables was 4.3 per cent in May '99. This was not high, though an improvement over two per cent logged in May 1998; but cumulative growth in April-May was 2.6 per cent against three per cent in the corresponding two months of 1998.

There has been no spectacular rise in demand for consumer non- durables, which have a weight of 23.2 per cent in IIP. But production of consumer durables (with a weight of just over five per cent in IIP) was up 17.1 per cent in May (against 4 per cent a year ago) and 18.9 per cent in April-May (4.7 per cent). Thus, consumption of non-food articles at the base level of society seems to be near-stagnant; the better-off are boosting their consumption (cars, white goods, scooters, etc).

IIP data show a spurt in production of capital goods, up 19.5 per cent in May from 5.1 per cent in thecorresponding month of 1998; and up 15.4 per cent in April-May this year from 8.8 per cent a year ago. Investment demand has boosted capital goods (weight 9.7 per cent), and this has radiated to intermediate goods (weight 26.4 per cent), seen in their output growth to 10.5 per cent in May (against 4.4 per cent in May 1998) and to 8.7 per cent in April-May (5 per cent a year ago).

The revival causation thus runs from a rise in investment demand to a rise in consumer durable goods demand via a rise in intermediate goods. A rise in demand for day-to-day consumption goods would give a fillip to industrial revival, but that would require relative prices of foodgrains (and not only of food articles) to decline.