India’s industrial production in the month of September 2020 grew for the first time in seven months. The index of industrial production rose 0.2 per cent on-year, after falling a downward revised 7.4 percent in the previous month, and beating market expectations of a 2 per cent contraction. IIP rose taking cues from increased output in mining (1.4 per cent vs -9 per cent in August), and electricity (4.9 per cent vs -1.8 per cent). On the other hand, the fall in manufacturing activity also remained less severe than in previous months. It fell 0.6 percent, compared to a fall of 7.9 per cent in August 2020.
Along with the IIP data, the government today also released the inflation numbers of October, which shows a worrying trend. The annual consumer price inflation in India rose to 7.61 per cent in October 2020 from 7.34 per cent in the previous month. CPI rose at the highest rate since May 2014, and remained above the RBI’s comfort range of 2-4 per cent for the seventh straight month. The retail inflation was mostly shot up by high food prices in the month. Food inflation surged to 11.07 per cent, which is the highest since January.
Meanwhile, given the disruptions caused by the coronavirus pandemic, Finance Minister Nirmala Sitharaman today rolled out the Atmanirbhar Bharat stimulus package 3.0. Among other measures to provide a fillip to the economy, the government announced specific measures to support the capital expenditure of industries. FM Sitharaman announced Rs 10,200 crore of additional budget outlay towards capital and industrial expenditure in the fields of domestic defence equipment, industrial incentives, industrial infrastructure, green energy. The government also announced Rs 18,000 crores additional outlay for PM Awaas Yojana (PMAY) –Urban that would consume 25 LMT steel, and 131 LMT cement, providing a major cushion to the core sectors.