Indo Asian News Service
New Delhi, Nov 12: India’s factory output growth decelerated sharply to 3.6 per cent in September from 6.4 per cent in the month before, even as the annual retail inflation for October moved up significantly to 5 per cent from 4.41 per cent in the month before, official data showed Thursday. Food inflation was even higher at 5.25 per cent. While the industrial production growth was lower on account of a dip in manufacturing index, the inflation rate moved up due to sharp increase in the prices of food articles in general and those for pulses in particular, as per the separate sets of data released by the ministry of statistics and programme implementation.
The annual inflation rate has firmed up to this level from 3.74 per cent recorded for August. As per the official numbers on the Index for Industrial Production, the index for mining rose 3 per cent in September while that for manufacturing and electricity were higher by 2.6 per cent and 11.4 per cent respectively. The corresponding growth rates in the month before were 3.8 per cent, 6.9 per cent and 5.6 per cent respectively. Overall, however, the factory output for the first half of this fiscal was placed slightly higher at 4 per cent, against 2.9 per cent for the like period the previous year. The cumulative growth for the first five months was tad higher at 4.1 per cent.
In the case of inflation derived from the Consumer Price Index for October, the rural areas saw a much higher price rise of 5.54 per cent, as against 5 per cent in the urban areas. In the month before, the inflation rates stood at 5.05 per cent and 3.6 per cent respectively. Worryingly, the price rise in pulses and related products was as much as 42.2 per cent, which pushed up the overall index for food and beverages to 5.34 per cent. But the government said in a separate statement that the prices should ease soon as some 4,660 tonne of pulses had been seized from hoarders and auctioned or disposed off in the market.
Among the states, the maximum inflation of 8.14 per cent was reported from Andhra Pradesh, followed by 7.52 per cent for Chhattishgarh, 6.57 per cent for Karnataka and 6.14 per cent for Rajasthan. Punjab reported the least inflation of 3.18 per cent, followed by 3.37 per cent in Kerala and 3.8 per cent in Haryana.
Commenting on the industrial production data, Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII), said the factory output growth was expected to pick up in the third quarter of this fiscal, despite the moderation in the first half. “CII expects a significant recovery in consumer demand in the second half on the back of lower interest rates. Investment demand is also picking up as public sector projects are being implemented by the government,” Banerjee added. “There has been satisfactory growth in the manufacturing sector so far this year.” Regarding inflation, the industry chamber said it had been limited to touching the 5-per cent mark in September despite the increase in the price of some food items, particularly lentils. “With aggressive measures in place to control the price increase, CII is confident of a moderation going forward.”
The Reserve Bank of India and the union finance ministry had in February signed a monetary policy framework agreement under which the central bank will target retail inflation for policy rates. The target for inflation was set at 4 per cent, with a band of plus or minus 2 percentage points for the financial year 2016-17. There was also an interim target to bring consumer inflation below 6 per cent by January 2016.
