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Expert Views - Industrial output rebounds; retail inflation cools

Source : REUTERS
Last Updated: Thu, Jun 12, 2014 13:18 hrs
Car plant

India's industrial production rebounded more than expected in April to grow 3.4 percent over year-ago levels, after output had fallen in the previous two months, government data showed on Thursday.

Another set of data, which was also released on Thursday, showed the annual consumer price inflation eased to 8.28 percent in May, helped by slightly cooling food prices.

COMMENTARY

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI:


"Both the numbers are certainly encouraging. IIP (Index of Industrial Production) growth is a tad higher than market expectations due to the usual bunching of capital goods growth. We have to normalise that and then see the data.



"All the components of IIP, including power generation, mining and manufacturing have started showing signs of improvement. Going forward, the pace of improvement will depend on the pace of structural reforms undertaken by the new government.

"Today's data points will not have any bearing on the Reserve Bank of India's (monetary policy) stance because the two critical factors which will determine the RBI's next move will be monsoon -- impact of which will be clear only in August/September -- and the Union Budget, which will give the RBI some indication of the government's fiscal consolidation plans."

BACKGROUND

- India's new government led by Narendra Modi is looking to revive the economy through higher investment in infrastructure, which it hopes will boost demand in sectors such as cement, steel and power.

- A Reuters poll showed wholesale price inflation rose to 5.4 percent in May, 0.2 percentage points higher than in April. The data is due on June 16 at 0630 GMT.

- Improving consumer sentiment helped car sales post their first annual growth in three months in May.

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