Call for 'proactive' steps in Budget 2015 as IIP dips, inflation rises

NEW DELHI: Reflecting sluggishness in the economy, the industrial production growth has slipped to 1.7 per cent in December month-on-month, while inflation rose to 5.11 per cent in January, raising demands for proactive steps in the forthcoming Budget to boost economic expansion.

The growth in factory output, as measured by the Index of Industrial Production ( IIP), in the month under review was, however, higher as compared to December, 2013 when it expanded by 0.1 per cent.

The November IIP of 3.8 per cent has been revised upwards to 3.9 per cent.

The Consumer Price Index (CPI), computed with a new base year of 2012, rose to 5.11 per cent in January month-on-month mainly due to dearer food and beverages items including fruits and vegetables.

In December, retail inflation was at 4.28 per cent (recalculated with new base year). The same 5 per cent with 2010 as base year.

Commenting on data, industry chamber FICCI said: "We are hopeful that the forthcoming budget would factor in the slow growth in manufacturing for the last many months and the need to provide major incentives to revive investments in the sector."

It suggested that RBI should lower the interest rate as it is needed to boost consumer and investment sentiments.

Last month, Reserve Bank had lowered the rate of interest by 0.25 per cent to 7.75 per cent after a gap of 20 months.

After releasing the new series of CPI with 2012 as base year and rejigging weight of different items and groups, Chief Statistician T C A Anant said: "Inflation in 2014-15 will be lower than the 2013-14 level."

He further said that besides changes in weight of items and groups "we have shifted to geometric mean for computing inflation from arithmetic mean used in previous series".