IIP GROWTH, RETAIL INFLATION DIP

IIP GROWTH, RETAIL INFLATION DIP

The economy continued to witness high growth in industrial production in December and retail price inflation in January, despite both declining from their 17-month highs seen in the previous month. Despite persisting double-digit growth in capital goods and fast-moving consumer goods, the Index of Industrial Production (IIP) expanded at a slower pace of 7.4 per cent in December, from the upward revised 8.8 per cent in November.

Provisional estimates had put the November growth at 8.4 per cent. Infrastructure and construction grew 6.7 per cent, against 13.89 per cent in November. The numbers were bolstered by manufacturing and a low growth of 2.4 per cent a year ago due to demonetisation. INDIVJAL DHASMANA & ISHAN BAKSHI write.

The economy continued to witness high growth in industrial production in December and retail price inflation in January, despite both declining from their 17-month highs seen in the previous month.Despite persisting double-digit growth in capital goods and fast moving consumer goods, the Index of Industrial Production (IIP) expanded at a slower pace of 7.4 per cent in December, from the upward revised 8.8 per cent in November. Provisional estimates had put the November growth at 8.4 per cent. Infrastructure and construction grew 6.7 per cent, against 13.89 per cent in November.

The numbers were bolstered by manufacturing and a low growth of 2.4 per cent a year ago due to demonetisation.Madan Sabnavis, chief economist with CARE Ratings, said there was all-round performance, especially in manufacturing. “Cumulative growth at 3.7 per cent indicates that growth for the entire year could reach 5 per cent if this tendency is sustained.”

On the other hand, Consumer Price Index-based inflation fell from 5.21 per cent in December to 5.07 per cent in January, broadly in line with the Reserve Bank of India’s (RBI’s) projection. This justified the RBI stance of maintaining status quo on the policy rate. During the recent policy review, the RBI had raised projection for inflation to 5.1 per cent for the fourth quarter from the earlier 4.3-4.7 per cent.

“The CPI will move upwards” on implementation of the Budget proposals, said N R Bhanumurthy, Delhi-based economist at the National Institute of Public Finance. “Forget about interest rate cuts, get ready for rate hikes instead.”Morgan Stanley has predicted the RBI would tighten rates between October and December — or even before. Food inflation fell to 4.70 per cent from 4.96 per cent, while inflation in fuels fell to 7.73 per cent from 7.90 per cent. Vegetables prices remained high. These rose at 26.97 per cent in January, albeit less than 26.97 per cent in the previous month.

The gross domestic product (GDP) growth for the third quarter of the financial year is due this monthend. The second advance data is also expected then. Among the important data points to watch out for this month are Wholesale Price Indexbased inflation and exports data.

The GDP growth is estimated at 6.5 per cent in 2017-18 against 7.1 per cent in 2016-17, according to the Advance Estimates.The International Monetary Fund, World Bank, RBI and the Economic Survey have estimated this growth to be slightly higher at 6.6-6.7 per cent.Data showed that industrial performance and gross fixed capital formation, indicating investments, might recover in the third quarter. This was because the IIP had grown by 5.9 per cent in the third quarter of 2017-18, up from 3.3 per cent sequentially. IIP growth was on low base of last year.

The Business Standard, New Delhi, 13th February 2018

Household debt up, but India still lags emerging-market economies: RBI

Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...

CA Online

Search This Blog