Up tick in IIP growth warrants economic recovery: PHD Chamber

The up tick in IIP numbers for the month of January 2014 at 0.1% from -0.2% in December 2013 is encouraging and it warrants economic recovery going forward, said Mr. Sharad Jaipuria, President, PHD Chamber.

The growth in IIP has been witnessing negative trend since October 2013 has finally shown some signs of recovery in January 2014, said Mr. Jaipuria

Though the growth in electricity sector at 6.5% followed by intermediate goods at 3.4% is encouraging, the growth in consumer durables should also pick up in the coming months to push the overall manufacturing sector in positive growth trajectory.

However, the growth in consumer durables at -8.3% is improving significantly as it was -16.1% in December 2013.

The growth in consumer durables would be critical to strong and visible recovery in the industry sector, going forward, said Mr. Jaipuria. But the high costs of borrowings have impeded the recovery process in this segment since the last many quarters.

The recovery in car sales to a marginal growth of 1.4% in February 2014 will also reflect upon IIP in the coming months.

Since WPI inflation and CPI inflation are in the softening trend and subsiding month after month, RBI at this juncture should come forward to reduce the policy rates and help the industrial activity to recover at a faster pace, said Mr. Jaipuria.

CPI inflation has been decelerated to 8.1% for the month of February 2014 from 8.8% for the month of January 2014. WPI inflation has also been already subsided to around 5% for the month of January 2014, he said.

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