Double bonanza for economy: Macros improve as inflation down, factory output up

By: |
Updated: October 12, 2017 6:33:27 PM

Industrial production has made a remarkable growth at 4.3% defying slowdown from previous month's 1.2%.

rbi, Economic slowdown, narendra modi, economic growth, Urjit Patel, rbi governor Urjit Patel, india, india growth, reserve bank of india, rbi monetory policyIndustrial production has made a remarkable growth at 4.3% defying slowdown from previous month’s 1.2%. (Image: Reuters)

It is a twin bonanza for the economy as the Consumer Price Index (CPI) for September has gone down and the industrial production for July has made a remarkable growth defying slowdown from the previous month. The CPI Inflation for September was recorded 3.28%, down from previous month’s 3.36% mainly due to fall in food prices post monsoon.

The industrial production, which grew a meagre 1.2%, bearing the brunt of a dismal show of the manufacturing sector, made a remarkable comeback at 4.3%. Both CPI and IIP defied conservative predictions, including ET Now’s, which had predicted CPI to rise 3.4% and IIP to rise 2.5%. However, the with August’s industrial production at 4.3%, it is inching towards 4.5% growth in July last year.

The mining sector in August grew  9.4% as compared to 4.8% in July, while manufacturing sector grew 3.1% as compared to 0.1% in the previous month. The electricity sector also rose with its output at 8.3% as compared to  6.5% in July. Primary goods output was 7.1%, up from 2.3% in July. Capital goods output grew 5.4% from -1% in the previous month.

In August, the inflation accelerated to 3.36% on the back of a surge in food prices during the period. The Reserve Bank of India kept the repo rate unchanged last at 6% in its latest credit and monetary policy review, given the predictions of rising headline inflation. The central bank kept the policy stance neutral with the objective of limiting the medium-term target for CPI of 4% within a band of plus/minus 2%, while supporting growth.The lower inflation may now put pressure on the RBI to cut rates in its next monetary policy meeting.

The CPI food inflation fell to 1.25% in September from 1.52% in August. However, CPI fuel and light inflation grew 5.56% as compared to 4.94% in August, and CPI clothing & footwear at 4.63% as compared to 4.58% in August. While the CPI rural inflation has gone down from 3.22% in August to 3.15% in September, the urban inflation has gone up from 3.35% in August to 3.44% in September.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Will a India-EU trade breakthrough happen?
2China says EU, US trade moves lack awareness of WTO rules
3Arun Jaitley in US: Working on plan to rebuild capacity of banking sector, says FM