Despite Notes Ban, Factory Output For November Rises By 5.7%

[timmy]

Factory output grew by 5.7 per cent in November as against a decline of 1.8 per cent in October. The growth in the month of November is much higher against the expectation of economists. Economists surveyed by Reuters had forecast a 1.3 percent growth in factory output compared with a revised 1.8 percent year-on-year fall in October.

The factory output growth was mainly driven up by a surge in capital goods production, which remains highly volatile.

During November, the output in mining, manufacturing and electricity sectors grew by 3.9 percent, 5.5 per cent and 8.9 per cent respectively as compared to November 2015. 16 out of 22 industry groups in the manufacturing sector recorded positive growth during the month.  

On November 8, Prime Minister Narendra Modi had announced a ban on 500 and 1000 rupee notes, aimed at uprooting corruption and black money. It took out 86 per cent of the currency in circulation and resulted in a cash crunch that stroked fears of a freeze in the manufacturing sector, with most ratings agencies predicting a decline in the country's growth for at least the next six months.

The industry group 'Radio, TV and communication equipment & apparatus' has shown the highest positive growth of 32.2 per cent followed by 23.2 per cent in 'Electrical machinery & apparatus'.

The consumer price inflation also eased to over two-year low of 3.41 per cent in December, helped by a sharp cooling in food prices.

Economists surveyed by Reuters had expected annual retail inflation to come in at 3.57 per cent last month, compared with 3.63 per cent in November.

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