Industrial production hits speed breaker, but low inflation numbers provide ray of hope

The Index of Industrial Production (IIP) for the month of March was reported at 2.1% versus an ET Now poll of 3.1%. IIP had grown at 5% in February. The cumulative growth for the period April-March 2014-15 over the corresponding period of the previous year stands at 2.8%.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2015 stand at 148.5, 209.3 and 176.4 respectively, with the corresponding growth rates of 0.9%, 2.2% a ..

The cumulative growth in the three sectors during April-March 2014-15 over the corresponding period of 2013-14 has been 1.4%, 2.3% and 8.4% respectively.

As per Use-based classification, the growth rates in March 2015 over March 2014 are 2.3% in Basic goods, 7.6% in Capital goods and 1.9% in Intermediate goods.

The Consumer Price Indiex ( CPI) inflation for the month of April declined to 4.87% versus 5.25% in March.

Inflation has certainly declined from its record highs a couple of years ago. A fortuitous fall in commodity and crude prices, RBI's tight monetary policy, and from the government side commitment to fi scal discipline, prompt intervention in food market, and lower support prices for crops have all come together.

Meanwhile according to an HSBC survey, manufacturing and service sectors in India expanded at a faster pace last month than China, even as economic growth moderated overall in emerging markets.

The HSBC Emerging Markets Index ( EMI), a monthly indicator derived from Purchasing Managers' Index surveys, fell to 51.3 in April, from 51.5 in March, registering the weakest rate of expansion since January.

Of the four biggest emerging markets, China registered the weakest rise in output since January, while the Indian private sector business activity rose for the 12th consecutive month, albeit at the weakest pace since October.

Country's economy grew an estimated 7-7.5 per cent last fiscal year and will keep growing this year, but the government will have to invest more in agriculture to keep up the momentum, Finance Minister Arun Jaitley said last week.

"The country's potential is not 7 or 8 percent," Jaitley said. "The country's potential is to grow at double digit."

He said the agriculture sector was the biggest challenge for the government and that recent unseasonal rains have created an agrarian crisis.