Diwali dampener: IIP, exports shrink, inflation rises
New Delhi: Hopes of early economic revival were belied with key data released on the eve of Diwali showing contraction in industrial production, continued decline in exports and rise in retail inflation.
Besides, the much-talked spectrum auction received a lukewarm response from telecom operators, casting doubts whether the government will be able to realise Rs 40,000 crore as targeted from sale of radio waves.
After raising hopes of revival in August, the industrial production contracted again, shrinking by 0.4 percent in September due to dismal show by the manufacturing sector.
The factory output, as measured by Index of Industrial Production (IIP), declined by 0.4 percent as against an uptick of 2.3 percent in August.
Exports remained in the negative territory, declining by 1.63 percent in October pushing the monthly trade deficit to all time high USD 21 billion.
On the price front, there was no respite to the common man from rising inflation that is driven by high cost of food items such as sugar, pulses, vegetables as well as clothings.
The retail inflation moved closer to the double digit mark at 9.75 percent in October, even as India Inc pressed for interest rate cut to revive growth.
The economic growth rate slipped to nine-year low of 6.5 percent in 2011-12. It was 5.5 percent in the first quarter of the current fiscal prompting RBI to lower the growth projection for 2012-13 to 5.8 percent.
Terming the decline in industrial output in September as "very disappointing", Planning Commission Deputy Chairman Montek Singh Ahluwalia said the impact of recent reforms initiatives will manifest in the data for the second half of the fiscal.