Editorial : In slow mode: on manufacturing and inflation data

Manufacturing, inflation data give monetary policy makers room for an interest rate cut
Manufacturing activity(गतिविधि) in the country continues to remain be calmed. The latest Index of Industrial Production data show that output across the broad sector expanded(विस्तार/फैला हुआ) 1.3% in January, a clear loss of momentum(गति) from the 3% pace in December and a drastic(कठोर/भीषण) slowdown(मंदी/सुस्त होना) from the 8.7% growth seen in January 2018.

Overall, industrial output growth slumped(गिर पड़ना/संमिलित करना) to 1.7%, from 2.6% in December, and 7.5% a year earlier, as production in 12 of the 23 industry groups that comprise(समावेश करना/दाखिल करना) the manufacturing sector shrank(छोटा होना/छोटा होना) from a year earlier. These are quick estimates(अनुमान) that are likely to be revised(संशोधित).But the fact(तथ्य) that key job-creating industries, including(सहित) textiles, leather and related products, pharmaceuticals, rubber and plastic products(उत्पाद), and motor vehicles, reported(सूचना ) contractions(संकुचन/दबाव) hardly bodes well for the real economy. A look at the use-based classification of industries also gives little cause(कारण) for cheer. Capital goods, a closely watched proxy for business spending(खर्च ) plans, contracted 3.2%, a telling contrast with the 12.4% expansion(विस्तार/वृद्धि) posted 12 months earlier. A sustained(निरंतर ) revival(पुनः प्रवर्तन) on this vital(महत्वपूर्ण/जीवनप्रद) front may still be some time away. A recent survey(सर्वेक्षण) by IHS Markit of business activity expectations(अपेक्षाएँ), conducted(संचालित) over two weeks in the latter half of February, shows that Indian businesses plan to curb(नियंत्रण/रोक) outlays on hiring and capital spending, with sentiment(भावुकता) on capex at a one-year low. And growth in consumer durables(टिकाऊ) output was an anaemic 1.8% (7.6% in January 2018), another clear sign that spending on consumption of non-essentials(आवश्यक ) remains in search of favourable winds.

If the IIP poses cause for concern(चिंता/मामला), retail inflation(मुद्रास्फीति ) data hardly provide(प्रदान करना/मुहैया करना) much reassurance(आश्वासन/समझाना). While price gains(मूल्य लाभ) measured by the Consumer Price Index accelerated(जल्दी कर हुआ/त्वरित) to a four-month high of 2.57% in February, it is the persistent(दृढ़/सख़्त) deflationary trend in the prices of some farm items that is deeply(गहरी ) disquieting(बेचैनी), reflecting(दर्शाती/प्रतिबिंबित ) as it does a collapse(गिरावट/संक्षिप्त करें) in pricing power in the agrarian heartland. Vegetables, fruits and pulses and products all posted negative rates of inflation from a year earlier, of –7.69%, – 4.62% and –3.82% respectively(क्रमश/प्रतिष्ठा से). While urban consumers may cheer(प्रोत्साहन/वाहवाही) the increased(बढ़ी हुई) affordability(सामर्थ्य) of vegetables and fruits, rural(ग्रामीण ) demand(मांग) for manufactured goods will remain depressed(उदास/दबा हुआ ) unless there is a meaningful turnaround in the farm sector’s economic fortunes. Looking ahead, with Saudi Arabia committed(प्रतिबद्ध ) to deepening its production cuts in order to keep crude oil prices well-supported, it appears(लगना/रूप लेना) unlikely that India’s fuel and energy costs will stay soft for much longer. And with political parties sure to open the spending spigot in a bid(बोली) to woo voters, inflationary impulses(आवेगों/लालसा) will quicken. For now, though, with growth slowing and inflation still comfortably(आराम से/मौज से) within the Reserve Bank’s 2%-6% target range, monetary policy makers would feel justified in pressing ahead with one more interest rate cut at their meeting next month.