Dec factory output growth to fall to 5.5-6% from 17-month high in Nov: D&B

The D&B Economy Forecast of January notes IIP is still expected to clock a good growth in December 2017 due to the low base effect at play

India's factory output growth in December 2017 is projected to come down to 5.5-6 per cent, from a 17-month high of 8.4 per cent in November last year, commercial data provider Dun & Bradstreet (D&B) has said.  

The D&B Economy Forecast of January notes Index of Industrial Production (IIP) is still expected to clock a good growth in December 2017 due to the low base effect at play, although it is expected to be lower from November 2017.

In October 2017, IIP growth was at 2,2 per cent.

"A sustained rise in the capital goods segment and a turnaround in the consumer durables segment is warranted for the industrial activity to revive from here on. The government's thrust to revive the investment cycle and rise in optimism levels amongst businesses for increase in demand levels are expected to support industrial growth going ahead," the D&B January 2018 forecast notes.

The monthly forecast for January 2018 for 10-year G-Sec yield is 7.1-7.3 per cent while actual December 2017 yield was 7.35, it says.

Consumer inflation is also projected for January 2018 at 5.5-5.7 per cent, marginally higher as against the Consumer Price Index (CPI) of 5.21 per cent recorded in December 2017. 

"This year, we believe that the government will take special measures to revive rural economy. A recalibration in the direct taxation would be an added bonanza, provided the government is confident of realising its revenue via GST and enforcing tax compliance on all.

"We believe the slippage in the fiscal deficit target for FY18 to be modest given disruption created by two structural reforms, GST and demonetisation," lead Economist Dun & Bradstreet India Arun Singh said. 

"While the impact of high oil prices is not worrying as of now, risks are building up as it becomes widespread through the second and third round impact on inflation and current account deficit. This, along with cleaning up of the balance sheet of banks, needs to be handled carefully by the government," he added.