Industrial output hits 20-month low

The country’s industrial production fell to a 20-month low of 1.6% in December, dragged down by sluggish manufacturing performance but economists said it was not yet time to press the panic button. Economists attributed the decline to the statistical base effect as industrial output had risen 18% in the same year ago period and it is difficult to maintain momentum on such a high base. But they warned that the political uncertainty, which was delaying award of infrastructure projects, and jitters caused by high inflation and rising interest rate was affecting corporate decision making and investment. Foreign direct investment has already been affected by the continued gloom in the West. During April-November 2010, the latest period for which data is available, FDI inflows fell 27% to $19.33 billion. What is adding to the fears is the trade data for December, which revealed that for the first time in nine months, imports fell 11%. This could be a pointer to a decline in shipments of raw material and machinery into the country which are used for further production.

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