November Industrial Output looked positive, so as Inflation in December

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Government data showcased on Monday brought news of some economic revival with industrial activity registering a healthy growth of 3.8 percent during November last year, with only a marginal rise in December’s retail inflation.

Industrial activity, measured in terms of the Index of Industrial Production (IIP), registered a growth of 3.8 percent during November 2014, from a deceleration of 1.3 percent during the corresponding month of 2013, on the back of a rebound in capital goods.

The data shows a healthy increase from a negative 4.2 percent growth during October. The IIP had subsequently previously increased by 2.5 percent in September 2014. In August 2014, the industrial growth stood at 0.4 percent.

“It is heartening to see the growth in manufacturing in November. It is also important that cost of finance is brought down to stimulate investments and consumer demand along with measures to improve and ease the business regulatory environment in the states,” said Jyotsna Suri, President, Federation of Indian Chambers of Commerce and Industry (Ficci), while giving her feedback on the data.

The gain in November came mainly due to the higher output of electricity, manufacturing and mining sectors. The electricity sector grew by 10 percent from 6.3 percent in the corresponding month of the previous year. Manufacturing sector picked up by three percent from a drop of 2.6 percent in November, 2013.  The mining sector rose 3.4 percent from 1.6 percent increase in the corresponding month of 2013.

Retail inflation (CPI) in December rose to 5 percent after hitting a record low of 4.4 percent in November caused by higher food prices. The consumer price index-based inflation, however, fell in December from 9.87 percent during the corresponding month of 2013.  The IIP cumulative growth for April-November 2014-15 stood at 2.2 percent while the figure for the corresponding period of the previous year stood at 0.1 percent.

Manufacturing of basic, capital and intermediate goods showed healthy growth. Production of basic goods grew by seven percent, while capital goods was up 6.5 percent and intermediate goods rose by 4.3 percent. Overall, 16 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month under review.

Segment-wise, growth was witnessed in stainless steel (26.5 percent), sugar (49.5 percent), leather garments (40.3 percent), air conditioners (53.8 percent), scooters and mopeds (30.7 percent), commercial vehicles (20 percent), cotton cloth (23.8), rice (23 percent) and ayurvedic medicaments (35.3 percent).

Segment-wise, high negative growth was reported in ship building and repairs (-41.1 percent), wood furniture (-41.1 percent), sugar machinery (40.9 percent), generators (-28.6 percent), antibiotics (-20.7 percent), cigarettes (-23.3 percent), lubricating oil (-27.1 percent) and telephone instruments including mobile phones and accessories(-67.3 percent).

India Inc noted a clear turnaround in Indiaâ’s industrial production reflected in the November data.

The Associated Chambers of Commerce and Industry of India (Assocham) said “Sustaining and further building on this development is the need of the hour.”

“Alongside boosting the investor sentiments, cost of credit needs to be brought down on urgent basis,” the chamber said in a statement here.

“The Confederation of Indian Industry notes a marginal rise in retail inflation in December. However, this should not prevent the RBI from cutting benchmark interest rates in its forthcoming monetary policy announcement,” CII said in a statement.

“This assumes importance as investments have not shown a significant pick up and consumer durables continue to show a muted performance,” it added.

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