about 10 months ago
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The RBI must be feeling so vindicated. It had taken a pause in the last week policy, keeping its eye more on inflation and not on growth. And that has proved right.

Consumer Price Index (CPI) for Nov rose to 5.54% v/s 4.62% (MoM) and mainly on the back of food index which rose to 10.01% v/s 7.89% - this was driven by a 36% v/s 26% (MoM) jump in prices of vegetables.Obviously, this must have been thanks on the onions; it is making us cry all over again!

A quick look into the CPI internals (MoM):

  • Rural inflation – 5.3% v/s 4.3%
  • Urban inflation – 5.8% v/s 5.1%
  • Food – 10.01% v/s 7.89%
  • Vegetables – 36% v/s 26%
  • Clothing & footwear – 1.28% v/s 1.7%
  • Housing – 4.49% v/s 4.6%
  • Fuel & light - -1.9% v/s -2%

So on one hand, we had rising inflation and on the other, for another month, IIP contracted. For Oct, IIP was at 3.8% v/s 4.3% in Sept. The cumulative growth for the period April-October 2019 over the corresponding period of the previous year stands at 0.5%.

Internals of IIP (MoM):

  • Manufacturing -2.1% v/s -3.9%
  • Mining -8% v/s -8.5%
  • Electricity -12.2% v/s -2.6%
  • Primary goods -6% v/s -5.1%
  • Capital goods -21.9% v/s -20.7%
  • Intermediate goods 22.2% v/s 7%
  • Infrastructure & construction -9.2% v/s -6.4%

In terms of industries, eighteen out of the twenty three industry groups in the manufacturing sector have shown negative growth during the month of October 2019 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of computer, electronic and optical products’ has shown the highest negative growth of (-) 31.3 percent followed by (-) 27.9 percent in ‘Manufacture of motor vehicles, trailers and semi-trailers’. On the other hand, the industry group ‘Manufacture of chemicals and chemical products’ has shown the highest positive growth of 31.8 percent followed by 9.4 percent in ‘Manufacture of basic metals’.

Well, surely the Govt is clued in on this falling growth and hopefully, with the weekend round the corner, the FM will once again give some sops? A desperate push to improve moods is required. Merely giving sops to a small percentage on India Inc will not help immediately. The masses, the milieu of working and middle class people need something desperately…..only once their confidence is restored will growth pick up. The consumer story needs to take off…

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