April IIP rebounds to 3.4%

There is finally some good news trickling in about the economy . Two sets of data released on Thursday showed industrial output rebounding in April after two consecutive months of decline and retail inflation showing signs of moderation in May .
Coming against the backdrop of robust exports, the data points to some tentative signs of strength in the economy and may help the Narendra Modi government in its fight to revive growth and sentiment.
Data released by the Central Statistics Office (CSO) on Thursday showed the index of industrial production rising an annual 3.4% in April compared with a 1.5% expansion in the year-ago period.
Growth was powered by electricity and manufacturing and feeble recovery in the mining sector. The manufacturing sector, which has been under severe stress for months, rose an annual 2.6% in April compared with an expansion of 1.8% in the same month last year, while electricity rose an annual 11.9% in April compared with a growth of 4.2% year-on-year in April 2013. The mining sector, which has faced the brunt of policy delays, rose an annual 1.2% in April compared with a decline of 3.4% in April 2013.
Separate data showed retail inflation displaying signs of cooling in May . Provisional annual inflation rate based on the all-India general CPI (combined) was 8.28% compared to 8.59% for the previous month.
The corresponding provisional inflation rates for rural and urban areas for May 2014 were 8.86% and 7.55%. Inflation rates (final) for rural and urban areas for April 2014 were 9.17% and 7.69%.
Economists cheered the positive data but cautioned that it was too early to order the champagne. The moderation in inflation may provide RBI headroom to ease interest rates. But patchy monsoon rains could be an obstacle.

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