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Industrial activity to remain subdued over muted demand, 2019 polls: Report

On rupee, the report said concerns over widening trade deficit, rise in global crude oil prices, and uncertainty over the general election outcome are expected to drag down the domestic currency

Press Trust of India  |  New Delhi 

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India's industrial activity is expected to remain subdued in the near term, owing to muted domestic demand, weak global economic outlook and uncertainty among businesses over the outcome of Lok Sabha elections, 2019, says a report.

According to Economy Forecast, concerns about the government curtailing its investment due to significant shortfall in tax collections against the target, are expected to keep the industrial activity subdued in the near term.

Dun & Bradstreet (D&B) expects (IIP) to have moderated by 1.5-2 per cent during December 2018.

Graph

As per data released by the (CSO), industrial output growth dropped to a 17-month low of 0.5 per cent in November on account of contraction in manufacturing sector, particularly consumer and capital goods.

Factory output as measured in terms of the IIP had grown by 8.5 per cent in November 2017.

Lead said the likelihood of a robust economic growth during 2018-19 was dented by unfavourable developments and unexpected shocks that occurred during the year.

He said the upcoming union budget will set the tone for the economy.

"We believe that there are likely to be some populist measures announced in the Budget, given it is the election year, around the rural and MSME sectors and overall job creation," Singh said adding that the initiatives around labour and land laws, if taken, would be an added support.

On rupee, the report said concerns over widening trade deficit, rise in global crude oil prices, and uncertainty over the outcome are expected to drag down the domestic currency in the near term, even as a likely pause in the rate hike is expected to support the local unit.

expects the rupee to depreciate to around 70.6-70.8 per US dollar during January this year.

First Published: Wed, January 23 2019. 12:40 IST
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