India's factory output 2.7% in March; base year revised to 2011-12

Geronimo Vena
Mag 15, 2017

India's retail inflation decelerated to 2.99 per cent last month from 3.89 per cent for March as food prices reported a massive plunge, official data showed on Friday.

The inflation rate is lower than a 4.79 percent annual rise forecast by economists in an worldwide poll.

The WPI inflation readings, reflecting the annual rate of price rise, as per the new base stood at 5.29 percent in March, 5.51 percent in February, 4.26 percent in January, 2.10 percent in December and 1.82 percent in November.

The CSO said that the new series shows higher industrial growth rates in most months during April 2012-March 2017 as compared to the old series due to shifting of base to a more recent period, increase in number of factories in panel for reporting data, exclusion of closed ones, and inclusion of new items and exclusion of old ones.

Output of capital goods was also lower at 1.9 per cent last fiscal versus 2.1 per cent in 2015-16.

According to the new series data released today, wholesale inflation in food articles was 1.16 per cent in April, lower than 3.82 per cent in March. Electricity generation too slowed to 6.2 per cent, from 11.9 per cent in March 2016. The old series was based on 2004-05 prices. 173 new items has been added under manufacturing goods.

The Federation of Indian Chambers of Commerce and Industry (FICCI) on Friday welcomed the data on WPI and IIP.

In April 2016, the consumer price index (CPI) inflation was at 5.47%. The comparative figures for March read (-) 12.42 per cent and (-) 7.24 per cent.

The working group for the development of the methodology of compilation of IIP had recommended that the new item basket for IIP include 55 mining products and 809 manufacturing products, with electricity as a single product.

Talking to press, T.C.A Ananth, Chief Statistician of India said that The IIP data is now being calculated with a revised base year of 2011-2012 to make the comparison more relevant.

The CPI-based retail inflation for the month of March this year was revised marginally upwards to 3.89% compared to 3.81% recorded previously.

The change in baseline for the IIP and WPI is expected to bring in more accuracy in mapping the level of economic activity and calculating other numbers like national accounts.

Aditi Nayar, principal economist at ICRA, said the composition of the IIP may see greater changes than the WPI when the new series data are announced.

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

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