Factory output rises 2 per cent

Cheaper food pulls down retail inflation to 6-month low of 4.83% in March.

After negative growth in the last three months, industrial production rebounded by two per cent in February 2016, boosted by mining, power and consumer durables. It grew 4.8 per cent in February 2015.

Retail inflation, which determines the RBI’s monetary stance, fell to a six-month low of 4.83 per cent in March on account of cheaper vegetables, fruits and pulses. Food inflation for March too softened to 5.21 per cent.

If retail inflation holds below five per cent, some analysts said it could encourage RBI to ease its repo rate further. A growing factory output and a subdued inflation are considered to be good for the economic growth of a country.

The manufacturing sector, which has a weightage of over 75 per cent of the index, grew at 0.7 per cent against a growth of 5.1 per cent in February 2015, according to the data put out by the Central Statistics Office (CSO).

Though industrial gro-wth is positive at two per cent for February, Madan Sabnavis, chief economist at Care Ratings, said: “It is still very low and does not reveal any turnaround. Unless such a trend is maintained for three successive months, it will not be possible to conclude so.”

Capital goods was down 9.8 per cent indicating low investment activity whilst consumer goods and infra sector fared better due to some spending from households and investment by the government.

Worried over the slow pace of recovery, Indian industry has sought government intervention as well as a lower interest rate regime to accelerate growth.

“Competitive interest rates are necessary for reviving investor sentiment which in turn would help put the economy back firmly on the growth trajectory. However, it is now the responsibility of banks to pass on benefits of rate cuts to the end-consumer,” industry body Assocham said in a statement.