Economy Doing Well Than Expected

With a bit of an expansion in the industrial production and an ease in the consumer prices, India’s economy gave good news, giving some relief to the ruling coalition before next month’s general election. According to the data from statistics ministry, the improved consumer demand helped the industrial output expand by 0.1 percent on year in January which happens to be the first growth in four months. The fall in December’s output was revised to 0.17 percent on year from 0.6 percent earlier.
Separately, the retail inflation eased for the third straight month to a 25-month low of 8.10 percent in February from the 8.79 percent in the previous month on moderating vegetable prices. India Economist at Capital Economics in Singapore, Miguel Chanco said that “today’s data show India’s beleaguered economy moving in the right direction, but still far from healthy.’
The data showed production of consumer goods, a proxy for consumer demand, contracted an annual 0.6 percent in January, an improvement from a 4.7 percent drop a month ago. Asia’s third-largest economy has been struggling to recover from a stagflation-type situation where economic growth has been stuck below 5 percent for the past seven quarters while price continue to rise at a fast clip.
The cooling of prices will offer some relief to the government headed by the Congress party, which is trailing in opinion polls ahead of the polls that begin on April 7. It is still widely expected to be defeated, in part for its failure to control inflation and revive the economy.