IP registers steepest fall in over 14 years

No Impact Of Stimulus Plans

New Delhi: Despite the stimulus packages announced by the government in November, industrial production in December 2008 was 2% lower than in the same month of 2007 — the steepest year-on-year drop for any month in more than 14 years.
    When the index of industrial production registered Yo-Y decline of 0.3% in October, it was the first time since 1994 that there had been negative growth in any month. The pick up in November raised hopes that attempts by the RBI and government at reviving industry were bearing fruit.
    That hope has been belied by the December figures released on Thursday. The government expressed confidence the January numbers would show an improvement. Following the slump in December, growth in industrial output for the first nine months of FY09 is 3.2% against 9% in the corresponding period last year.
Inflation dips
to 4.39%, RBI
may cut rates
New Delhi: Inflation has dipped to 4.39% in the week ending January 31, the lowest level since January 12, 2008, mainly due to recent fuel price cuts. On January 28, the government had cut petrol price by Rs 5 a litre, diesel by Rs 2 a litre and LPG by Rs 25 per cylinder. In the week ending January 24, inflation was at 5.07%.
    Such a steep fall in inflation will give RBI room to cut key rates, paving the way for banks to lower interest rates. In the last two weeks, inflation declined by 1.25 percentage points. Several Economists feel if the government and RBI do not check this fall now, inflation may turn negative by April, triggering a deflation scenario. TNN