IIP clocks 13-mth high growth of 5.7% in Nov despite note ban

Industrial production grew at a 13-month high of 5.7 per cent in November notwithstanding the demonetisation that was implemented, while retail inflation remained subdued at multi-year low of 3.41 per cent in December, government data showed today.

The industrial output during November, when the government announced demonetisation of high value currency notes of Rs 500 and Rs 1000 effective from 9th of the month, showed overall improvement in manufacturing, mining and electricity sectors, according to the figures released by the Central Statistics Office (CSO).

As regards the retail inflation measured in terms of Consumer Price Index (CPI), it slipped to a multi-year low of 3.41 per cent in December reflecting cash crunch. This is the lowest level at least since January 2014.

CPI-based inflation stood at 3.63 per cent in November 2016 as per data released by the government. A year ago, in December 2015, retail inflation was at 5.61 per cent.

"Given the reduction in lending rates announced by several banks, we hope to see an increase in both consumption and investment which will hopefully have a positive impact on manufacturing growth in coming months. We look forward to an accommodative monetary policy stance from RBI to sustain momentum," industry body FICCI said while commenting on twin macro economic data released today.

According to the IIP data, the highest level of industrial production growth was recorded in October, 2015, at 9.9 per cent.

Following demonetisation of Rs 1,000 and Rs 500 notes announced on November 8, 2016, it was feared that cash crunch will hit all the sectors.

According to the CSO data, IIP for the month of October last year was revised slightly upwards to a contraction of 1.8 per cent from provisional estimates of (-) 1.9 per cent.

IIP growth during April-November period this fiscal remained almost flat at 0.4 per cent compared to 3.8 per cent a year ago.

Manufacturing sector, which constitutes over 75 per cent of the index, grew at 5.5 per cent in November compared to a decline in output by 4.6 per cent earlier.

During the April-November period, the manufacturing sector recorded a contraction of 0.3 per cent compared to a growth of 3.9 per cent.

Similarly, electricity generation grew at 8.9 per cent in November compared to just 0.7 per cent a year ago. Mining output grew 3.9 per cent in November compared to 1.7 per cent same month a year ago.

Capital goods production increased by 15 per cent in November compared to a decline in production by 24.4 per cent earlier.

As per use-based classification, growth rates in November 2016 over November 2015 are 4.7 per cent in basic goods and 2.7 per cent in intermediate goods.

Consumer durables and consumer non-durables recorded growth of 9.8 per cent and 2.9 per cent respectively, with the overall growth in consumer goods being 5.6 per cent.

In terms of industries, 16 out of 22 industry groups in the manufacturing sector have shown growth during the month of November 2016 as compared to the corresponding month of the previous year.

According to Consumer Price Index data for December, the decline in retail inflation was on account of falling prices of vegetables and pulses. This is the lowest level at least since January 2014.

The Consumer Price Index (CPI)-based inflation stood at 3.63 per cent in November 2016, as per the data released by the Ministry of Statistics and Programme Implementation.

A year ago, in December 2015, retail inflation was at 5.61 per cent.

Inflation in vegetables category slipped further in the negative territory to (-)14.59 per cent, as against 10.29 per cent in November.

Likewise, prices of pulses and products also slipped further in negative territory at (-)1.57 in December.

However, inflation in fruits came in at 4.74 per cent, slightly up from November's 4.60 per cent. Cereals and products at 5.25 per cent too showed a rise in inflation print during the month against 4.86 per cent in November.

Protein items meat and fish had inflation print of 4.79 per cent in December, as against 5.83 per cent in November. Egg prices witnessed 6.41 per cent rise, as against 8.55 per cent in the previous month.

Overall, the Consumer Food Price Index was down at 1.37 per cent in December compared with 2.11 per cent in November.

The CPI-based inflation in fuel and light segment was at 3.77 per cent in December as against 2.80 per cent a month ago.

Rural retail inflation stood at 3.83 per cent in December compared with 4.13 per cent in November. For urban sector, it was recorded at 2.90 per cent as against 3.05 per cent in the previous month.