High base effect and poor core sector to mar industrial growth
The Index of Industrial Production (IIP) data which will be released today may show a contraction in the factory output in October.
This may be a result of the high base in the same month last year and also due to sluggish performance by the eight infrastructure industries. The core sectors, which constitute around 38% of the IIP, contracted after eight months in October by 0.6% after growing at a high pace of 8% in the previous month.
In October last year, the IIP grew by a massive 8.4% -- a 16-month high at that time.
A Reuters poll of 26 economists suggested that the industrial activity shrank 1.2% in October. The output had expanded 2% in September.
This may pose a worry for the government who are relying heavily on a second half recovery in the economic activity across all the sectors.
However, Moody's Analytics projected industrial growth at 2.4% in October. It said that the industrial production remained weak in this month.
"Production is capped largely by weak demand, but a range of supply side issues in infrastructure and regulation constrain production long term", the firm had said in its Asia Pacific Preview on Monday.
According to Religare Institutional Research, the factory output contracted 1% in October.
This may be a result of the high base in the same month last year and also due to sluggish performance by the eight infrastructure industries. The core sectors, which constitute around 38% of the IIP, contracted after eight months in October by 0.6% after growing at a high pace of 8% in the previous month.
In October last year, the IIP grew by a massive 8.4% -- a 16-month high at that time.
A Reuters poll of 26 economists suggested that the industrial activity shrank 1.2% in October. The output had expanded 2% in September.
This may pose a worry for the government who are relying heavily on a second half recovery in the economic activity across all the sectors.
However, Moody's Analytics projected industrial growth at 2.4% in October. It said that the industrial production remained weak in this month.
"Production is capped largely by weak demand, but a range of supply side issues in infrastructure and regulation constrain production long term", the firm had said in its Asia Pacific Preview on Monday.
According to Religare Institutional Research, the factory output contracted 1% in October.
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