Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 3.8
Article rating: No rating
Article rating: 2.0
Article rating: 1.5
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 1.0
Article rating: No rating
Article rating: No rating
RSS

News

Negative impact of GST weighs on inflation, factory output numbers: India Inc

Author: IANS/Wednesday, December 13, 2017/Categories: Economy

Negative impact of GST weighs on inflation, factory output numbers: India Inc

New Delhi, Dec 12 - India Inc. on December 12 expressed concern over a sharp rise in India's annual retail inflation in November, even as factory output growth in October contracted.

According to industry body Assocham, manufacturing activity slowed in October as inflows of new orders stagnated, even as the negative effects of the Goods and Services Tax (GST) continued to dampen demand levels.

"We at Assocham expect that domestic conditions for growth will improve gradually, mainly driven by consumption demand, which is expected to strengthen with implementation of the Seventh Pay Commission and government stimulus package to revive the economy," said D.S. Rawat, Secretary General, Assocham.

As per the "Quick Estimates" of Index of Industrial Production (IIP) data released by the Central Statistics Office (CSO), the slowdown in the manufacturing sector almost halved the rise in India's factory output in October to 2.2 per cent from 4.14 per cent in September and 4.2 per cent during the corresponding month last year.

On a year-on-year basis, the manufacturing sector, which has the maximum weightage in the overall index, expanded by just 2.5%, whereas mining output was a mere 0.2% and the sub-index of electricity generation by 3.2%.

Meanwhile, macro-economic data on December 12 also showed that a sharp spurt in food and fuel prices pushed India's annual retail inflation in November over the RBI's median level of 4%.

According to the data from the Ministry of Statistics & Programme Implementation, consumer price index (CPI) inflation in November rose to 4.88% from 3.58% reported for October.

The rate of retail food inflation during November stood at 4.41 per cent on a year-on-year basis, as compared 1.90% the previous month owing to a rise in the prices of items like vegetables, milk-based products, cereals, meat and fish.

Ratings agency Crisil said that it maintains its average inflation forecast for fiscal 2018 at 4%. 

"Accordingly, we also expect the Monetary Policy Committee (MPC) to keep policy rates on hold for the remainder of this fiscal. That said, there could be room for a rate cut only if the downside risks to growth materialise, and inflation undershoots the MPC's estimates," Crisil said in a statement.

"The (IIP) moderation is not a good sign as it may suggest that the healthier growth of the previous two months may largely be on account of restocking activity. The subdued industrial performance in October is also attributable to poor performance in exports."

Angel Broking pointed out that the inflation level is sharply higher than the RBI prescribed comfort level of 4% as a long-term average. 

"The RBI had already warned about the sharp increase in inflation in its monetary policy in the aftermath of the higher HRA payable to government employees," said Jaikishan J. Parmar, Research Analyst at Angel Broking.

"The real surge in inflation came in rural inflation which sharply moved up from 3.36 % to 4.79%. This is likely to force the MPC to put off rate cuts for the time being."

Print Rate this article:
No rating

Number of views (278)/Comments (0)

Kavita Giridhar Mallya

IANS

Other posts by IANS
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free