Bad news on the macroeconomic front continued to pour in Tuesday, with industrial output in December decreasing 0.6 percent on the heels of a 0.8 percent decline (revised from 0.1 percent) the month before. A CNBC-TV18 poll had estimated the index of industrial production (IIP) for December at 1.1 percent.
To further add to the gloom, consumer price inflation climbed to 10.79 percent in January, up from 10.56 percent in December. Rural consumer inflation rose to 10.88 percent from 10.74 percent month-on-month and urban inflation climbed to 10.73 percent from 10.42 percent.
Last week, the Central Statistical Office (CSO) has estimated India’s GDP growth for FY13 at a decade low of 5 percent, a number hotly disputed by the finance ministry. In fact, Finance Minister P Chidambaram recently said that some green shoots of recovery were visible.
But economic data indicators only point to the slowdown getting worse.
Consumption, one of the key pillars of the economy and which had been supporting growth all this while, finally appears to be buckling under the pressure of inflation.
Consumer durables sector declined 8.2 percent in December, compared with a 5.1 percent growth during December 2011. Consumer goods sector declined 4.2 percent, compared to 10.1 percent year-on-year.
Monthly sales of passenger cars, another key indicator of consumer sentiment, have fallen in five out of the last six months. Industry body SIAM has said that even the flat to 1 percent growth forecast for the current financial year will not be met.