IIP Grows 0.1% In January

Industrial output remained flat in January after three months of consecutive decline while retail inflation slowed to a 25-month low in February, providing some headroom for the central bank to ease interest rates.
Industrial output rose an annual 0.1% in January, led by expansion in the electricity sector. The industrial sector had grown 2.5% in January 2013.
But the overall data showed that the key sector continues to remain under acute stress with the manufacturing sector contracting 0.7% in January, the fourth consecutive month of decline. For the April-January period, industrial growth remained flat compared to an expansion of 1% year-on-year in the year earlier period.
The sluggish data adds to the pressure for the government heading into national elections in April and May. The UPA coalition has faced severe criticism over its handling of the economy and the January numbers may provide fresh ammunition to critics.
But there was some silver lining for policymakers struggling with dismal economic data. Annual inflation rate based on all India general CPI (combined) for February 2014 rose 8.10%, slower than the previous month’s 8.8% as vegetable prices moderated on the back of an improvement in supplies. It maintained its downward trend after months of hovering around double-digits. However, some pressure points still remained, which may prompt the Reserve Bank of India to move cautiously.
The inflation rates for rural and urban areas for February 2014 are 8.51% and 7.55%. The final inflation rates for rural and urban areas for January 2014 were 9.35% and 8.09%.
The industrial output data showed the capital goods sector, a key gauge of industrial activity, fell 4.2% year-on-year in January compared to a decline of 2.5% in the year earlier period.
The consumer durables sector fell an annual 8.3% in January compared to a decline of 0.7% in January 2013 while consumer goods fell 0.6% year-on-year in January compared to an expansion of 2.5% in January 2013.
India Inc reiterated calls for urgent steps to revive growth and the need for the RBI to ease interest rates.