INDUSTRY STILL FRAGILE

Showing no sign of economic recovery, industrial output remained in the negative territory for the third month in a row by contracting by 0.6 per cent in December, even as retail inflation eased to two-year low of 8.79 per cent in January on account of fall in food prices. Worried over continued decline in Index of Industrial Production (IIP), mainly due to a fall in manufacturing, India Inc stepped up its demand for a rate cut by the Reserve Bank to boost growth. The decline in factory output, which began in October with IIP shrinking by 1.6 per cent, continued the same trend in November with a 1.3 per cent contraction, followed by 0.6 per cent in December In December 2012, IIP had contracted by the same margin of 0.6 per cent. As regards retail inflation, the Consumer Price Index (CPI) data revealed that it fell for the second consecutive month and eased to 24-month low of 8.79 per cent in January mainly on account of a a drop in food prices. It was 9.87 per cent in December, down from 11.16 per cent a month ago. Expressing disappointment over the IIP data, industry chamber CII made a case for "an accommodative monetary policy to spur demand and revive investment activity, especially as inflation has started receding". According to the data released by the government, contraction in IIP during November 2013 has been revised to 1.3 per cent, from the provisional estimate of 2.1 per cent dip. "IIP continues to show low growth for the past 7-8 months, mainly because of slump in manufacturing. At this point of time, there is a need to boost fresh investments to bring back factory output to the positive terrain," TCA Anant, Chief Statistician of India said.