October IIP grew at 4.9% versus contraction of 0.4% in September: ET Now poll

NEW DELHI: The Index of Industrial Production ( IIP) for the month of October likely expanded at a robust 4.9% versus a contraction of 0.4% in September says an ET Now poll. The consensus range of the poll stood between 1% to 7.5%.

IIP normally picks up before Diwali and sees a dip after that. Owing to the fact that Diwali this year was in November, the October production is expected to have witnessed a growth.

The poll predicts that the manufacturing sector would have seen a 5.2% growth as against a contraction of 1.5% in September. While the mining sector is expected to have grown at 3.1% versus 5.5% in September, the electricity sector may have seen a 5.2% growth versus 3.9%.

The manufacturing sector output may have been impacted by a lower base. On the other hand, mining and electricity sector outputs may have been impacted by a higher base.

IIP is expected to improve in the first half of 2013. The poll participants believe that inflation will remain high, but will peak of at 7.5-8% in December due to a high base effect. Government policy reforms remain key to the country's GDP growth, the poll says.

The RBI is likely to cut repo rates by 50-75 bps during January-July 2013 period. The bank's action will be guided by growth-inflation dynamics.