IIP contracts by 0.1% to four-month low in Nov
Industrial production expanded by a meagre 1% during the April-November period, compared with 3.8% a year earlier. In October, helped by the robust manufacturing attributable to Diwali demand and a favourable base, industrial output hit a 16-month high growth of 8.3%.
The slump was largely due to a high base (factory output had grown 6% in November 2011) and manufacturers' possible drawing down on inventories built up before Diwali to cater to the festive demand, instead of stepping up production, analysts said, adding that the industrial sluggishness may have bottomed out. The favourable base is likely to augur well for the Index of Industrial Production (IIP) in the rest of this fiscal, they said.
Analysts expect the IIP to perform well in the next fiscal as well, aided by a revival in private consumption growth, a marginal increase in exports as well as increased government spending ahead of the general elections. “Higher farm incomes (assuming a normal monsoon), increased pre-election welfare expenditure by the government and lower interest rates are expected to improve household spending in 2013-14... Improved
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