Focus shifts to RBI as green shoots wilt

Industrial production unexpectedly dropped to a three-year trough of 4.2% in October...

New Delhi | Published: December 13, 2014 12:45 pm

Industrial production unexpectedly dropped to a three-year trough of 4.2% in October, the first contraction this fiscal, offering a reality check of the state of the economy since the Narendra Modi-led NDA stormed to power. Private consumption, for long a laggard, plummeted further and manufacturing growth hit a three-year low of -7.6% in October, while retail inflation eased to a fresh low of 4.38% last month, building an irresistible case for the RBI to effect the much-anticipated monetary policy shift in its next bi-monthly review on February 3, if not earlier.

The government, however, revised the September growth in the index of industrial production (IIP) to 2.8% against 2.5% announced earlier.

Importantly, “radio, TV and communications equipment and apparatus” — which has been witnessing negative growth this fiscal, especially after the disruption of Nokia’s operations in Tamil Nadu — contracted 70.2% in October due to complete stoppage of production at the plant.

rbi-graphExclusive of this segment, the overall industrial production would have shrunk by just 0.2%. Yet, given that consumer durables contracted 35.2% in October and capital goods output shrank 2.3%, the economy is clearly yet to turn the corner.

By: | The Financial Express

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  1. A
    Dec 13, 2014 at 7:19 pm
    Request PM Modi to appoint capable persons like Arun Shourie Yashwant Sinha as Finance Minister and Industries minister before industrial production drops further. With due respect to Jailtley better he can be a Law and Justice Ministry