UPDATE:We are back on track: Finance Secretary

As industry grew by 2.7 per cent in May, the government today said factory production is showing signs of improvement, reflecting that the country is back on the trajectory of growth.

"The IIP is showing a further improvement ... This is what we were expecting, what we have been saying for some time now and except capital goods and non-consumer durables, the rest are certainly looking much better. I think we are back on track as was expected," Finance Secretary Ashok Chawla told reporters here.

He said the trend of growth will continue and the sectors which have seen "slight" negative growth will improve in the coming few months.

According to the official industrial data, industry grew 2.7 per cent in May, more than double the 1.2 per cent in the previous month.

During the month, manufacturing sector output rose by 2.5 per cent, while mining and power generation grew 3.7 per cent and 3.3 per cent, respectively.

The consumer durables sector, which includes TV sets and refrigerators, posted a high growth rate of 12.4 per cent against 2.8 per cent in May 2008, reflecting a pick-up in demand.

However, consumer non-durable goods production declined by 2.3 per cent and the capital goods industry continued to record negative growth, dipping by 3.6 per cent during the month.

Chawla said the demand in non-durable sector was not picking up because of capital goods, which are used by people for new projects and become 'relatively less significant in the scheme of things when there are issues of downturn".

When asked whether the IIP would reach five per cent or not, Chawla said that it is difficult to predict at this point of time.

As regards monsoon and its effect on the various sectors, he said monsoon is a matter of concern and an important thing as absence of monsoon "will have an impact on various segments".