Rise of Index of Industrial production to 4.3% in August 2017

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The pre-festival season has helped to re-stock or recover the industrial output and helped it grow 4.3% in August. The pre-festival season has not affected the CPI or Customer Price Index and has been stagnant at around 3.28 percent. According to statistics, the food inflation rate has gone down from 1.52 percent in August to about 1.25 percent in September. With all these going on the core inflation rate which is the inflation in manufacturing food products increased to 4.6 percent from 4.5 percent.

The IIP or the Index of industrial production went up by 0.9 percent in the month of July due to the pre-stocking is done in the time of GST. Manufacturing is more than three fourth of the Index of Industrial Production was able to recover 3.1 percent in August which was down 0.2 percent in July.

The growth was due to the fear of the Goods and Services Tax which was impacting production of the industry to a greater extent. This cannot be said as a broad-based recovery because almost 50 percent of the industry went through a fall in August. According to an India Ratings Chief Economist Mr. Devendra Pant, the Index of Industrial Production is yet to be broad-based.

The total growth in the overall output at the factory was 2.2 percent over the months of April to August which is much lower than that of last year which was around 5.9 percent. The numbers from the month of July and August will make an impact on the GDP of the country in the second quarter of the year. The gross domestic product grew by 5.7 percent, and the CPI grew about 3.28 percent in the month of August from 2.36 in the month of July.

In the coming months, the capital goods output will grow by 5.4 percent in this fiscal year. Finally, there is a rise in this sector after a constant decline for over 4 months. There was a growth in the Primary goods by 7.1 percent from 2.2 percent in the month of August. There was also a decline of 2.5 percent from 3.5 percent in the construction goods sector from July to August. The rates of the food products have gone down, but there is a rise in the rate of light, fuel, intoxicants, and tobacco. An unfavorable base effect might be the reason for bringing the inflation rate back to around 4 percent by the end of the year.

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