1. Call for ‘proactive’ steps in Union Budget as IIP dips, inflation rises

Call for ‘proactive’ steps in Union Budget as IIP dips, inflation rises

Reflecting sluggishness in the economy, the industrial production growth has slipped to 1.7 per cent in December month-on-month...

By: | New Delhi | Published: February 12, 2015 10:12 PM
Indian economy, Indian economy growth, economic growth, economic growth in India, industrial production, industrial production growth, industrial production news

The November IIP of 3.8 per cent has been revised upwards to 3.9 per cent. (Reuters)

Reflecting sluggishness in the economy, the industrial production growth has slipped to 1.7 per cent in December month-on-month, while inflation rose to 5.11 per cent in January, raising demands for proactive steps in the forthcoming Budget to boost economic expansion.

The growth in factory output, as measured by the Index of Industrial Production (IIP), in the month under review was, however, higher as compared to December, 2013 when it expanded by 0.1 per cent.

The November IIP of 3.8 per cent has been revised upwards to 3.9 per cent.

The Consumer Price Index (CPI), computed with a new base year of 2012, rose to 5.11 per cent in January month-on-month mainly due to dearer food and beverages items including fruits and vegetables.

In December, retail inflation based was at 4.28 per cent (recalculated with new base year). The same 5 per cent with 2010 as base year.

Commenting on data, industry chamber FICCI said: “We are hopeful that the forthcoming budget would factor in the slow growth in manufacturing for the last many months and the need to provide major incentives to revive investments in the sector.”

It suggested that RBI should lower the interest rate as it is needed to boost consumer and investment sentiments.

Last month, Reserve Bank had lowered the rate of interest by 0.25 per cent to 7.75 per cent after a gap of 20 months.

After releasing the new series of CPI with 2012 as base year and rejigging weight of different items and groups, Chief Statistician T C A Anant said: “Inflation in 2014-15 will be lower than the 2013-14 level.”

He further said that besides changes in weight of items and groups “we have shifted to geometric mean for computing inflation from arithmetic mean used in previous series”.

Food and beverages inflation in January was 6.13 per cent due to costlier fruits, vegetable and cereals.

The rate of price rise in egg contracted by 0.24 per cent in January, while the same shot up to 9.38 per cent in milk and related products.

The government also released Consumer Food Price Index (CFPI) or which stood at 6.06 per cent on annual basis at national level.

The CFPI in urban areas was 6.96 per cent while it was 5.69 per cent in rural areas in January.

Similarly, the retail inflation or CPI in urban and rural areas was 4.96 per cent and 5.25 per cent respectively.

The price rise in ‘pan, tobacco and intoxicants’ was 8.21 per cent while it was a low of 3.74 in the fuel and light segment.

Inflation dipped in case of sugar and confectionery as well as in transport and communication segments.

The Central Statistics Office has been releasing CPI for Rural, Urban and Combined, at state/UTs and all India level, since January 2011.

With this (base) revision, the gap between Price Reference Year (Base Year) and the Weight Reference Year has been minimised.

Apart from base revision, a number of methodological improvements have been introduced in the revised series.

Prices of Antyodaya Anna Yojanna (AAY) have also been included in addition to Above Poverty Line (APL) & Below Poverty Line (BPL) prices being taken in the existing series.

The weight of food and beverages is 45.86 in the new 2012 series compared to 47.58 in 2010 series for national index.

The weight of fuel and light segment is 6.84 in the new series as against 9.49 in the 2010 series.

The weight of clothing and footwear segment has been increased to 6.53 from 4.73 while that of housing is also hiked to 10.07 from 9.77.

On IIP front, manufacturing output, which constitutes over 75 per cent to the index, grew by 2.1 per cent in December compared to a dip of 1.1 per cent in the same month a year ago.

For April-December period, the sector saw an output growth of 1.2 per cent, compared to a contraction 0.4 per cent in the year-ago period.

Output in the mining sector contracted by 3.2 per cent in December, compared to a growth of 2.6 per cent in the same month last year.
During the April-December period, the output has grown by 1.7 per cent.

The production of capital goods, a barometer of demand, grew by 4.1 per cent in December as against a contraction of 2.5 per cent in same month of last year.

During the April-December period, the sector showed an output growth of 4.8 per cent.

Power generation growth slowed to 4.8 per cent in December compared to 7.5 per cent in same month in 2013.

In April-December, electricity production growth was 10 per cent.

Overall the consumer goods output growth remained subdued at 0.7 per cent in December compared to a contraction of 4.6 per cent in the same month of 2013.

During April-December, it dipped to 4.9 per cent.

Consumer durable production declined by 9 per cent in December compared to a dip of 16.4 per cent in same month in 2013. During April-December, the production has contracted by 15.2 per cent.

However, the consumer non-durable segment grew by 5.7 per cent in December compared to 2.8 per cent growth in the same month a year ago. In April-December, the production grew by 2.2 per cent.

Overall, 13 out of the 22 industry groups in the manufacturing sector have shown positive growth during the month of December 2014 year-on-year.

On price rise front, under the new series of retail inflation, the weight of pan, tobacco and intoxicants has been increased to 2.38 from 2.13. Similarly the weight of miscellaneous has been increased to 28.32 from 26.31 in the new series.

The number of priced items has been changed from 437 to 448 in rural and from 450 to 460 in urban at all India level.

In the revised series, 11 new priced items have been added, without dropping any item, in rural sector at all India level. In case of urban, 7 priced items have been dropped and 17 new priced items have been added.

  1. No Comments.

Go to Top