IIP clocks 13-mth high growth of 5.7% in Nov despite note ban

Industrial production grew at a 13-month high of 5.7 per cent in November notwithstanding the demonetisation that was implemented, while retail inflation remained subdued at multi-year low of 3.41 per cent in December, government data showed today.

The industrial output during November, when the government announced demonetisation of high value currency notes of Rs 500 and Rs 1000 effective from 9th of the month, showed overall improvement in manufacturing, mining and electricity sectors, according to the figures released by the Central Statistics Office (CSO).

As regards the retail inflation measured in terms of Consumer Price Index (CPI), it slipped to a multi-year low of 3.41 per cent in December reflecting cash crunch. This is the lowest level at least since January 2014.
 

CPI-based inflation stood at 3.63 per cent in November 2016 as per data released by the government. A year ago, in December 2015, retail inflation was at 5.61 per cent.

"Given the reduction in lending rates announced by several banks, we hope to see an increase in both consumption and investment which will hopefully have a positive impact on manufacturing growth in coming months. We look forward to an accommodative monetary policy stance from RBI to sustain momentum," industry body FICCI said while commenting on twin macro economic data released today.

According to the IIP data, the highest level of industrial production growth was recorded in October, 2015, at 9.9 per cent.

Following demonetisation of Rs 1,000 and Rs 500 notes announced on November 8, 2016, it was feared that cash crunch will hit all the sectors.

According to the CSO data, IIP for the month of October last year was revised slightly upwards to a contraction of 1.8 per cent from provisional estimates of (-) 1.9 per cent.

IIP growth during April-November period this fiscal remained almost flat at 0.4 per cent compared to 3.8 per cent a year ago.

Manufacturing sector, which constitutes over 75 per cent of the index, grew at 5.5 per cent in November compared to a decline in output by 4.6 per cent earlier.