Comments
India’s factory output growth, based on the Index of Industrial Production (IIP), for the month of December 2022 came in at 4.3 per cent — lower than the 7.3 per cent growth recorded in November. However, the performance is higher than the 1 per cent growth seen in December 2021. The expectation now is that the industrial growth is likely to reach up to 7 per cent in January.
All eyes are on another high frequency indicator — retail inflation rate based on the Consumer Price Index — which will be released on Monday. Both these indicators have a key role in deciding the next course of action on policy interest rate (repo rate) review which is to take place in April.
The manufacturing sector’s output grew 2.6 per cent in the month under review compared with 0.6 per cent recorded in December 2021, showed data released by the National Statistical Office (NSO). While mining output rose 9.8 per cent (2.6 per cent), power generation jumped 10.4 per cent (2.8 per cent).
Aditi Nayar, Chief Economist, ICRA, said the January growth number is likely to be in the range of 5-7 per cent. This, as the growth of most available high frequency indicators improved last month relative to December, partly reflecting a favourable base owing to the onset of the third wave of Covid-19 witnessed in January last year.
“Going forward, the y-o-y growth in IIP is likely to improve in the ongoing quarter (from 2.4 per cent in Q3 FY23), partly boosted by the typical year-end push in volumes to achieve targets as well as a low base, “ Nayar said.
Vivek Rathi, Director (Research), Knight Frank India, expressed concern on the 10.4 per cent contraction in consumer durable output as for the long term sustained economic growth, consumption demand is needed to strengthen. “Increased inflation level has reduced household disposable income and central bank’s response that has increased consumer interest rate can potentially impact many discretionary items. Categories like housing, which is enjoying a favourable consumer sentiment, is largely undeterred from these pressures as yet but the government and RBI should now closely watch the pressure on homebuyers to avoid derailment of momentum in this key consumption and economic category,” he said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.