Despite demonetisation and consequent cash crunch Industrial production grew at a 13-month high of 5.7 per cent in November while retail inflation remained subdued at multi-year low of 3.41 per cent in December, Government data showed on Thursday.
The industrial output during November, when the government announced demonetisation of high value currency notes of Rs500 and Rs1000 effective from 9th of the month, showed overall improvement in manufacturing, mining and electricity sectors, according to the figures released by the Central Statistics Office (CSO).
As regards the retail inflation measured in terms of Consumer Price Index (CPI), it slipped to a multi-year low of 3.41 per cent in December reflecting cash crunch. This is the lowest level at least since January 2014.
CPI-based inflation stood at 3.63 per cent in November 2016 as per data released by the government. A year ago, in December 2015, retail inflation was at 5.61 per cent.
“Given the reduction in lending rates announced by several banks, we hope to see an increase in both consumption and investment which will hopefully have a positive impact on manufacturing growth in coming months. We look forward to an accommodative monetary policy stance from RBI to sustain momentum,” industry body FICCI said while commenting on twin macro economic data released today.
According to the IIP data, the highest level of industrial production growth was recorded in October, 2015, at 9.9 per cent.
Following demonetisation of Rs1,000 and Rs500 notes announced on November 8, 2016, it was feared that cash crunch will hit all the sectors.