Economic woes continue as IIP contracts, export growth dips

Economic woes continue unabated, with the industrial production contracting by 2.1 per cent and export growth decelerating to six-month low of 3.49 per cent, raising clamour for rate cut by the Reserve Bank in its credit policy on January 28.
Measured in terms of movement of Index of Industrial Production (IIP), factory output also recorded its worst six-monthly performance in November, mainly due to poor performance of manufacturing sector and declining output of consumer goods particularly white goods.
As regard exports, the data showed marked deceleration in growth during December on account of fall in the shipment of petroleum goods.

Worried over the declining growth, India Inc stepped up its demand for a rate cut by the RBI to boost industrial output.
The contraction of factory output by 2.1 per cent in November comes over a decline of 1 per cent during the same month corresponding year. It has remained in the negative zone for the second month in a row after dipping by 1.6 per cent in October 2013.
The previous low in IIP was recorded at (-) 2.5 per cent in May, 2013.
As regards exports, it stood at USD 26.3 billion in December compared with USD 25.4 billion in the same month of 2012. Petroleum exports, which contribute significantly to the country's trade basket, declined 16 per cent, mainly on account of maintenance shutdown at Reliance plant.

Terming the decline in IIP as "worrisome", CII urged the RBI to come out with accommodative monetary policy to should "to revive investment and propel demand, especially in consumer durables which are deep in the red.