Revised data shows IIP growing faster, WPI easing

by Edgar Hayes May 13, 2017, 11:47
Revised data shows IIP growing faster, WPI easing

India released on Friday a new series of industrial output and wholesale inflation data, revising the base year to 2011/12 from 2004/05.

Consumer prices, the RBI's main policy target, likely rose 3.49 per cent in April, according to a Reuters poll of economists, compared with an increase of 3.81 per cent in March.

When asked about any impact of these new series of indices on Goods and Services Tax (GST) which is scheduled to be rolled out on July 1 this year, Anant, however, said, "With the new revised indices, there may be some impact on retail and wholesale inflation numbers, post rollout GST".

"However, in the second half it will be nearing 5 percent, which is in line with RBI's trajectory and, therefore, a rate cut is not anticipated". It has 407 item groups, as against 399 in old series.

Food inflation was 0.61 percent last month, lower than 1.93 percent in March.

The government also introduced new products in the wholesale inflation and production indexes while removing older ones to reflect contemporary demand trends.

As a result, industrial output growth in 2016-17 rose a healthy 5% compared with 0.7% under the 2004-05 base year.

Manufacturing sector, which accounts for more than 77 percent of IIP grew 1.2 percent in March compared with 1.4 percent in February and 5 percent in March previous year. The mining sector, however, expanded by 9.7 per cent in March 2017 compared to a growth of 4.7 per cent past year.

A new "food index" is being compiled combining the food items under primary articles and food products under manufactured products.

The coverage of the new series of IIP is limited to the organised sector only.

The base year was revised from 2004-05 to 2011-12.

The IIP base year has also been changed to ensure that it remains more relevant in the years that it is operational, Chief Statistician of India TCA Ananth said at the joint briefing.

Coke and refined petroleum product manufacturing, which contributes 7.4 percent to the country's manufacturing, fell to 86.9 from 113.3 YoY.

The base year reset is expected to bring in more accuracy in measuring the level of economic activity as well the national income.

A deflation of 13.64% in the prices of pulses was an influencing factor.

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