The country's industrial output has dipped 0.4 percent in December last year as compared 0.9 percent in the same month last year, because of the ontraction in consumer and capital goods production, the data provided by the government has shown today.
A month after the Centre’s demonetisation drive, India’s factory output dipped by (-)0.4 per cent in December, a data provided by the government showed today. The factory output had increased by 5.7 percent in November last year. It encountered a (-)0.9 per cent slide in the same month last year.
As per the the data released by the Central Statistics Office (CSO), the dip was mainly due to 2.00 per cent fall in manufacturing output, which has the most weightage in the overall index.
The IIP in November (175.8) was lower than October 2016 (178.1), suggesting industrial production actually dropped sequentially, as was mostly the case in earlier months as well. “Going by the production trend in some sectors such as auto, next month’s (December) IIP growth data may be more indicative of the impact of demonetisation,” Crisil Research wrote after data release.
The impact of the cash crunch, however, got reflected more in retail inflation that hit 3.41% in December, the lowest since November 2014, as food inflation crashed to just 1.37% in December from 2.03% in November. This suggests the cash crunch during the kharif harvest might have prompted producers to sell cheap, resulting in lower prices of many items even at the retail level.
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Although retail inflation averaging under 4% in the past three months, lower than the Reserve Bank of India’s (RBI) 5% target for March 2017, has created some room for the monetary policy panel to trim rates at the next meeting on February 8, some analysts say it may still choose to wait for the fiscal road map to be laid out in the Budget to loosen the policy rates. A rise in global commodity prices, led by oil (it has risen almost 18% since end-November), may also serve to dash the rate cut hopes in February as well.
(With inputs from IANS)