IIP, trade & CPI figures deepen economic gloom
On Diwali eve, a raft of economic data dashed hopes that the economic slowdown may have bottomed out, prompting the industry to plead vehemently for a rate cut by the central bank and bold reform measures by the government. Industrial production unexpectedly contracted by 0.4% in September despite a supportive statistical base, as manufacturing dried up and electricity generation tumbled, while a deceleration in capital goods segment for the seventh month in a row bore out continuing dismal investment climate.
Merchandise trade deficit in October stood at $21 billion, the widest in the last 17 years, while consumer inflation moved closer to the double digit mark at 9.75% in October from 9.73% in the previous month on soaring prices of food and clothing items.
Some analysts have predicted in a Reuters poll that the October wholesale price inflation – due on Wednesday – might have risen to an 11-month high of 7.96% from 7.81% in September, which itself is at the highest level during the current fiscal.
For the government, which seeks to contain the fiscal deficit at 5.3% of the gross domestic product (GDP) this fiscal with spending cuts and a renewed focus on revenue mop-up, Monday's dismal economic data was indeed disconcerting. Lacklustre response to Monday's 2G spectrum auction also confirmed fears that the the non-tax revenue mop-up through this route would fall woefully short of the targeted R40,000 crore. The finance ministry, apparently perturbed by the abundance of bad economic news, chose to remain silent.
Planning Commission deputy chairman Montek Singh
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