Encouraged by the 8.2 per cent growth in industrial output in October, Finance Minister P. Chidambaram today said that it reflected emergence of “green shoots” in the economy.

“I am very encouraged by the indications of the green shoots in economy in terms of production. IIP figures are very encouraging,” he told reporters here.

Factory output, as measured by the Index of Industrial Production (IIP), soared to a 16-month high of 8.2 per cent in October led by good performance of the manufacturing, power, capital as well as consumer goods sectors, indicating sudden recovery in the economy.

It had contracted by 5 per cent in October in the previous fiscal.

So far this fiscal, Chidambaram said IIP had shown positive growth only in May at 2.5 per cent and August at 2.3 per cent.

“Let’s see what the next four months bring us. Investments are taking place, capacity is being created and consumption is happening in consumer durables and non-durables,” the Minister said.

He said that intermediate goods, a good indicator of future production, grew 9.4 per cent.

“Capital goods output at 7.5 per cent is very encouraging. Since April it was in negative. This is the first month of positive growth”, he added.

Capital goods output, it may be recalled, dipped 26.5 per cent in October 2011. Manufacturing sector, which constitutes over 75 per cent of the index, grew 9.6 per cent in October against a contraction of 6 per cent in the same month last year.

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