Ind-Ra pegs March factory output growth at 1.9%

It said it expects industrial production in March to get a boost from better performance in core sectors of economy

Industrial production in March is likely to grow at 1.9% while deflationary pressure in the wholesale price index will moderate in April data, India Ratings and Research said today.

Ind-Ra estimates the Index of Industrial Production (IIP) growth for March to come in at 1.9% and Wholesale Price Index (WPI) based inflation at (-)0.4% in April.

The Consumer Price Index (CPI) based retail inflation is projected to come around at 4.9%, it said.

"Industrial production in March 2016 is likely to remain close to February 2016 levels and on the price front wholesale price deflation will continue to moderate and retail inflation will remain stable in April 2016," Ind-Ra said in a statement.

Industrial production grew 2% year-on-year in February after staying negative for the last three months.

Ind-Ra said it expects industrial production in March to get a boost from better performance in the core sectors of the economy.

The eight core industries that comprise around 38% of IIP grew 6.4% YoY in March as against 5.7% in the previous month.

"Ind-Ra believes electricity and steel production will drive industrial production in March 2016," it said.

It said wholesale price deflation to continue despite high prices of pulses and sugar. WPI has been negative for the last 17 months, however, deflation is likely to moderate in April. WPI inflation was (-)0.9% in March.

Ind-Ra said it expects benign oil prices to continue in current fiscal.

Retail inflation, it said, will remain stable at 4.9% in April as against 4.8% in March and 5.3% in February.

"Soft oil prices will keep retail inflation in check, although price pressures could emerge from food items such as sugar and pulses," it said.

IIP for March and CPI for April is scheduled to be released on May 12, WPI for April is scheduled for release on May 16.