13.9.14

IIP growth slows to 0.5% in July


Industrial production slowed to a four month low of 0.5% in July mainly due to a fall in manufacturing output, while retail inflation hovered around the 8% level in August, underlining the fact that the economy may not be completely out of the woods. Although there is a clear improvement in sentiment, reflected in higher business and consumer confidence, and higher demand for some key industrial products such as automobiles, economists warned that there are a few more months of volatility ahead, especially in the backdrop of the Supreme Court verdict cancelling several coal block allocations.
Sectors such as mining have seen an improvement, while there is a significant growth in power generation, estimated at close to 12% in July.
Given that inflation remains at elevated levels, the RBI may not be willing to cut rates in the next monetary policy review at the end of the month. Although retail inflation slowed to 7.8% in August from 7.96% in the previous month, food prices have remained high. Data released on Friday showed a 24% jump in the price of fruits, while vegetables were up over 15%.Milk too was 11% more expensive in August, while cereals and pulses prices were around 8% higher. Economists, however, said with 50 paise a month increase in diesel price coming to an end, there will be some relief in the months ahead.




Indirect tax collections grew 9% in August, mainly on account of a jump in customs collections, indicating that there may be pick up in industrial activity in the coming months.
Indirect tax collections rose to Rs.40,644 crore in August, with a near 10% rise in customs duty mop-up. Buoyed by a pick up in the import duty collections, the overall kitty for April-August was 4.6% higher at over Rs 1.94 lakh crore. The run rate is, however, much lower than the gross indirect tax growth target of over 20% for the current financial year. The August numbers will come as a relief to tax authorities as well as policymakers since indirect tax collections had witnessed a slowdown in July, clocking a growth of 4.9%, mainly due to a poor show by customs.

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