Prime Minister Narendra Modi’s often repeated “Achchhe din” seems to have arrived for country’s economy as not only retail inflation dropped to 5.52 per cent in October as against 6.46 per cent in September, but industrial production also grew at a three-month high of 2.5 per cent in September mainly on account of better mining and manufacturing output and larger offtake of capital goods. The oil prices on Wednesday also fell to $77.48 raising hopes that petrol and diesel prices may be cut at least by Re 1 per litre this weekend.
Reflecting the sentiment of the economy, stock markets scaled new high on Wednesday. Sensex closed above the 28,000 level, posting gains of 98.84 points; Nifty crossed 8,400 level on buying in auto, banking and FMCG stocks and closed at 8,383.30, up by 20.65 points.
Experts said that situation is getting better for the economy and ongoing decline in oil prices will come handy for the RBI in meeting its target for inflation. The price of Indian crude basket has fallen to a low of around $81 a barrel as against $108.05 in May end.
At the last policy review on September 30, RBI Governor Raghuram Rajan had said the trajectory of inflation was on course as assumed by the RBI in its glide path. He had said the target of getting consumer price inflation to 8 per cent by January 2015 was more certain, while the risks to the January 2016 target of 6 per cent had subsided.
Coming back to inflation, helped by softening prices of food items, the retail inflation declined to 5.52 per cent in October, the lowest since the new series of data was introduced in January 2012. This is the fourth consecutive month of decline in the Consumer Price Index based inflation or retail inflation which had fallen to 6.46 per cent in the previous month.
The overall food inflation measured on CPI came down to 5.59 per cent in October as against 7.67 per cent in the previous month. Retail prices of vegetables declined by 1.45 per cent as against a rise of 8.59 per cent in September, according the data released by the Ministry of Statistics and Programme Implementation.
Industrial production grew at three-month high of 2.5 per cent in September, mainly on account of better mining and manufacturing output and larger offtake of capital goods. The factory output, as measured by the Index of Industrial Production (IIP), grew at 2.7 per cent in the same month last year.
For August, it was revised to 0.48 per cent from the provisional estimates of 0.42 per cent released last month, according to the data released by the Central Statistics Office on Wednesday.The industrial production expansion was 4.3 per cent in June and 0.4 per cent in July this year. During the April-September period, IIP rose by 2.8 per cent, as against 0.5 per cent in same period in the previous fiscal.
Manufacturing output, which constitutes over 75 per cent of the index, grew by 2.5 per cent in September, compared to 1.4 per cent in the same month a year ago. For April-September, the sector saw an output growth of 2 per cent, compared to 0.2 per cent in the year-ago period. The mining sector production grew by 0.7 per cent in September as against of 3.6 per cent a year ago.
During April-September, the growth was by 2.1 per cent as against a contraction of 2.5 per cent in the same period last fiscal. The production of capital goods, a barometer of demand, grew by 11.6 per cent in September, against 6.6 per cent decline in same month of last year.
During April-September period, the output of capital goods grew by 5.8 per cent as against a dip in production by 0.6 per cent. Overall, 15 of the 22 industry groups in manufacturing showed positive results.
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