As industrial output expanded at 7.5 per cent in January, India Inc on Monday said the improvement augurs well for the return of broad based recovery in industrial performance which may be on the up-slope, going forward.
Besides, industry bodies yet again nudged the RBI to lower interest rate as retail inflation fell to a 4-month low of 4.44 per cent in February.
“Looking ahead, we expect that industrial performance would be on a clear up-slope with both consumption and investment picking up pace during the year,” CII Director General Chandrajit Banerjee said.
The chamber also noted the softening of the CPI inflation print on account of a downswing in food prices.
“This (fall in CPI) should spur RBI to resume its rate easing cycle to give a boost to the nascent recovery currently underway in the economy,” Banerjee said.
However, Assocham Secretary General D S Rawat said it would be safe to assume that a lot of advantage has accrued because of the low base effect of the previous year when the growth had plunged following demonetisation.
Besides, he said, even though the consumer inflation at 4.4 per cent in February may be lower, the undercurrent remains biased on the upside, “making RBI disinclined towards any rate cut, though the industry would like it to happen”.
Industrial production grew at a high rate of 7.5 per cent in January 2018 against 3.5 per cent in the year-ago month on the back of good show by manufacturing coupled with higher offtake of consumer and capital goods.
The Index of Industrial Production (IIP) had grown at 7.1 per cent in December 2017, according to the data released by the Central Statistics Office (CSO) today.
The IIP growth in January this year was mainly on account of up-tick in manufacturing sector which constitutes 77.63 per cent of the index. It grew by 8.7 per cent during the month as compared to 2.5 per cent in January 2017, showing signs of recovery in the economy.
Capital goods, a barometer of investments, showed a sharp increase in output by 14.6 per cent in January, 2018 as against a decline of 0.6 per cent year ago.
Retail inflation fell to a 4-month low of 4.44 per cent in February on cheaper food articles and lower cost for fuel.
Data released by the Central Statistics Office (CSO) showed that the rate of price rise in the consumer food segment was lower at 3.26 per cent in February, as against 4.7 per cent in the previous month.