Industrial Recovery Fragile IIP May Grow 0.8% In December: Ind-Ra

Indian Manufacturing
Industrial recovery will continue to remain fragile and the factory output data for December is expected to be lacklustre at 0.8 per cent, India Ratings and Research (Ind-Ra) said today. Regarding inflation, it projected retail inflation to come in at 5.6 per cent and wholesale inflation at (-)0.1 per cent in January. As regards wholesale inflation, Ind-Ra expects it to turn positive by February 2016 mainly on account of rising food inflation and decline in the price of the Indian crude basket to USD 28.35/bbl in January 2016 from USD 35.68/bbl in December 2015. “This makes the average price of the Indian crude basket the lowest since November 2003 in USD and since February 2005 in Rupee term. Although a low level of inflation augurs well both for the economy and corporates, the prolonged phase of deflation in WPI however is hurting the government’s tax revenues and corporates sales growth,” Ind-Ra said.

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