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Last updated: 19 Jan, 2016  

Industry THMB IIP data: Recovery still on track

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Bikky Khosla | 19 Jan, 2016
Fall in factory output, as shown by official data released last week, appears statistical rather than real. According to Quick Estimates of Index of Industrial Production for November, industrial output registered a negative growth of 3.2 percent for the month, but it is now clearly evident that we should not read too much into it. A closer look into the data shows that industrial recovery is still making moderate but steady progress. Retail inflation data, released on the same day, raises some concern, but again it is not something to worry about unduly. If reforms are pursued consistently, the ongoing recovery is unlikely to be derailed.

The November industrial data looks disappointing when we place it against the much higher growth figure of 9.9 percent in the month of October, but the cumulative April-November 2015 growth stands at 3.9 percent, compared with the 2.5 percent growth in April-November 2014-15. Similarly, manufacturing, which contracted 4.4 percent in November, grew at 3.9 percent in April-November period of FY16, against 1.5 percent growth in the year-ago period. Even when we average the growth numbers for October and November (2016), it gives 3.4 percent y-o-y growth, which, despite being lower than average 3.9 percent April-November growth, does not seem like spelling doom.

Spike in October IIP was due to spurt in demand in consumer products and capital goods during the festive season. It was also amplified by the base effect as October 2014 was a bad month. In addition, as pointed out by the Chief Economic Advisor recently, lesser number of working days in November and floods in Chennai through the month impacted the factory output numbers. Similarly, the rise in retail inflation in December is a concern, but it was mainly due to high food prices, driven by delays in the sowing of the rabbi crop and a hostile weather. Also, inflation is still below the central bank’s target of six percent.

It's very encouraging to see that the Government has continued its reform efforts. Last week, the "Start-Up India" initiative was launched. I think several measures introduced -- including three-year income tax holiday, exemption from capital gains levies on VC investments, exemption from inspections for three years, self-certification and cut in patent application fee, etc. -- will help improve the start-up ecosystem in the country. In addition, the recently cleared crop damage insurance scheme will provide a much-needed relief to the farm sector, which has been hit by two consecutive droughts. These are welcome moves.

I invite your opinions.
 
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caterpillar engines parts
mansour alwan | Fri Jan 29 02:51:48 2016
dear sirs we are egyptain company looking for caterpillar diesel engines parts


Good luck
Svenning Ericsson | Thu Jan 21 07:59:03 2016
Your government have the right direction about " make it in India" in combination with support to small companies. Within 5 year this strategy will give you a very big payoff . Good luck Svenning


Start-up India
P.S.Biradar | Wed Jan 20 06:49:34 2016
Really this scheme is encouraging one and our country will develop in coming years. This has to be implemented efficiently and sincerely.


Rupee devaluation - should make the rupee strong
VT Vijayaraaghavan | Wed Jan 20 06:27:41 2016
Rupee devaluation is the not the way to go about and the justification is as follows: 1. We are a major importing country. 2. Our exports are very small percentage to our imports. 3. To boost exports we need state of art machinery which have to be imported. The project cost will shoot up making it unviable for exports. 4. By devaluation our exports will grow is not true. The buyers immediately ask for price reduction thereby there is no gain to our country. 5. By devaluation the buyer only gains as he gets more material cheaply whereas our cost goes up by imported components like machinery, fuel etc etc. 6. To help the exporters various SOPs can be given like subsidised power on par with the developed countries, low finance charges on par with Libor, etc etc. I am of the firm opinion that the rupee should be made stronger and on the long run India will benefit. Regards, VT Vijayaraaghavan Coimbatore Mobile : 09843807744


IIP data: Recovery still on track
A.V. Chandran | Wed Jan 20 04:43:26 2016
In view of continuous crude oil price decreasing return corresponding continuous increasing return of revenue for the country stands established its bona fide economic support subject to continuous decreasing return in inflation for the last more than 15 months. For instance US$ 1/- per barrel decrease in crude oil price will have Rs 1 billion revenue per day. If we deeply examine economic status of the Nation with this crude oil cost decrease itself, our country could have registered wealthy economic status very much on macro level in comparison to oil producing rich countries hence our country is one of the richest countries in the world. Hence all the facts and figures indicated in the IIP data could be reviewed once or twice or thrice as all the facts and figures are not at actual.


IIP data: Recovery still on track
Kaushikk | Wed Jan 20 03:11:51 2016
Sir, i am always not in agreement of any such growth data, the indices/Index V/S the big cooked projections made by our ministries and the FM , or WB, ADB, all these are highly subjective and not with true objectivity. The other major reasons are Indian industries do not upgrade their technologies, never or hardly interested to invest in research and development. As a result, it becomes difficult to sustain the world market competition or the domestic market competition, fat profit margins and the quality of the product. Many industries most of the times lack funds that is the recovery of payments, the RMC etc; with the rising inflation . there are products which have round the year demand and we import paying heavy foreign exchange. None of the Indian companies have ever bothered to study or tried to learn about it e.g. the catalysts used in the manufacturing of petrochemicals, additives, oil and gas exploration machinery, it's spares. The concept of developing the ancillary industries by the PSU, the private sector big industries and many other like them, or even in the defence, space, atomic power plants where there is assured demand and assured business for mass industries in the country.


 
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