Industry shrinks 3rd time this fiscal; inflation at sub-3 pc

New Delhi, Mar 12: Industrial slowdown continued unabated as factory output contracted for the second month in a row in January, by 0.5 per cent, rekindling hopes of further rates cut by RBI.
Inflation at over six-year low by the February-end provided ample room for another round of monetary stimulus to beat the impact of global slowdown, even as many economists discounted the efficacy of such a measure alone.

For the first time in 16 years, industrial production fell for the second consecutive month, pulled down by negative growth in manufacturing and mining.

As such, the partial recovery in November proved an aberration in the recent months, with industrial growth turning negative in October, December and January.

This clearly showed that stimulus packages have not given industry the desired boost.

"All the three stimulus packages have not picked in. The industrial production figures would not reflect their impact," Chief Statistician Pronab Sen said.

As if to reflect the only benign impact of slowdown, inflation fell for the sixth consecutive week, to 2.43 per cent by February-end, the lowest in over six years.

With falling inflation, Crisil Principal Economist D K Joshi said, "I believe there could be a cut of 50 basis points in both repo and reverse repo rates next month." PTI