Economic woes continue as IIP drops by 2.1% in Nov, export growth dips
Economic woes continue unabated, with the industrial production contracting by 2.1% and export growth decelerating to six-month low of 3.49%, raising clamour for rate cut by the RBI in its credit policy on Jan 28.business Updated: Jan 11, 2014 02:48 IST
Economic woes continue unabated, with the industrial production contracting by 2.1% and export growth decelerating to six-month low of 3.49%, raising clamour for rate cut by the Reserve Bank in its credit policy on January 28.
Measured in terms of movement of Index of Industrial Production (IIP), factory output also recorded its worst six-monthly performance in November, mainly due to poor performance of manufacturing sector and declining output of consumer goods particularly white goods.
As regard exports, the data showed marked deceleration in growth during December on account of fall in the shipment of petroleum goods.
Worried over the declining growth, India Inc stepped up its demand for a rate cut by the RBI to boost industrial output.
The contraction of factory output by 2.1% in November comes over a decline of 1% during the same month corresponding year. It has remained in the negative zone for the second month in a row after dipping by 1.6% in October 2013.
The previous low in IIP was recorded at (-) 2.5% in May, 2013.
As regards exports, it stood at $26.3 billion in December compared with $25.4 billion in the same month of 2012. Petroleum exports, which contribute significantly to the country's trade basket, declined 16%, mainly on account of maintenance shutdown at Reliance plant.
Terming the decline in IIP as "worrisome", CII urged the RBI to come out with accommodative monetary policy to should "to revive investment and propel demand, especially in consumer durables which are deep in the red." According to data released by the government, industrial output for April-November period in 2013, too, contracted by 0.2% as compared to a growth of 0.9% in the same period of 2012-13.
The manufacturing sector, which constitutes over 75% of the index, declined by 3.5% in November as against a contraction of 0.8% a year ago.
During April-November, the sector's output contracted 0.6% compared to 0.9% in same period of 2012.
The consumer durables segment contracted by 21.5% in November. In the first eight months of the fiscal, the segment declined by 12.6% compared to a growth of 5.2% the same period in 2012.
On trade front, a 15.25% decline in imports to $36.4 billion, particularly in gold and silver shipments, helped to narrow the trade deficit to $10.1 billion in December. In November, the trade gap was $9.21 billion.
Oil imports grew 1.1% to $13.89 billion during the month.
Commenting on the figures, Rafeeq Ahmed, president of the Federation of Indian Export Organisations, said efforts are required to keep export growth in double-digits.
During April-December, exports aggregated $230.3 billion and imports $340.3 billion, while the trade deficit was about $110 billion.