M A I N   N E W S

On economic front, little to cheer about
* Industrial output, exports shrink
* Re at 2-month low
* Inflation nears double-digit mark
Sanjeev Sharma/TNS

New Delhi, November 12
It’s a gloomy Divali for the economy as the industrial production has contracted against expectations, trade deficit has reached a record high, rupee has touched a two-month low (near the Rs 55-to-a-dollar mark) and consumer inflation is within kissing distance of the double-digit mark.

Industrial output was in the negative territory by 0.4 per cent in September 2012. Even the growth for the previous month has been revised downwards to 2.3 per cent from 2.7 per cent. There was more bad news as increase in food prices helped retail inflation to edge up to 9.75 per cent, close to the double-digit mark in October.

Export data showed some improvement falling by just around 1 per cent in October, which was much better than the 10-15 per cent fall witnessed over the past three months. Imports, however, grew by 7 per cent and the trade deficit at $21 billion is at a record high for the month. Markets were also weak today and the rupee was close to the 55 mark.

The IIP numbers were surprising as these came way below consensus estimates predicting recovery.

Crisil Research said the industrial output growth for the first half of this fiscal now stood at 0.1 per cent as against 5.1 per cent for the same period last fiscal. Although the government had announced some reforms and policy measures to revive industrial growth recently, these would take a while to play out, it said. The report pointed to even more dismal numbers as industrial weakness was expected to continue in the near term and the industrial output growth for 2012-13 appeared headed towards a performance worse than the last fiscal.

There could be a downward revision of the IIP estimate for the full year, said Motilal Oswal Securities in a report. This is based on the fact that in the first half, the growth has only been 0.1 per cent with IIP remaining in negative territory for four out of six months.

According to industry body Assocham, the estimates of industrial production for September mirror the prolonged subdued industrial activity. The 0.4 per cent negative growth has dashed the hopes about growth being bottomed out and the present trough in the growth cycle continues.