India's industrial activity likely to remain subdued in near-term on muted domestic demand, weak global outlook: Report

New Delhi: India's industrial activity is expected to remain subdued in the near-term, owing to muted domestic demand, weak global economic outlook and uncertainty among businesses over the outcome of Lok Sabha elections, 2019, says a report.

According to D&B Economy Forecast, concerns about the government curtailing its investment due to significant shortfall in tax collections against the target, are expected to keep the industrial activity subdued in the near term.

Dun & Bradstreet (D&B) expects Index of Industrial Production (IIP) to have moderated by 1.5-2 percent during December 2018.

Indias industrial activity likely to remain subdued in near-term on muted domestic demand, weak global outlook: Report

Representational image. Reuters.

As per data released by the Central Statistics Office (CSO), industrial output growth dropped to a 17-month low of 0.5 percent in November on account of contraction in manufacturing sector, particularly consumer and capital goods.

Factory output as measured in terms of the IIP had grown by 8.5 percent in November 2017.

D&B lead economist Arun Singh said the likelihood of a robust economic growth during 2018-19 was dented by unfavourable developments and unexpected shocks that occurred during the year.

He said the upcoming Union budget will set the tone for the economy.

"We believe that there are likely to be some populist measures announced in the Budget, given it is the election year, around the rural and MSME sectors and overall job creation," Singh said adding that the initiatives around labour and land laws, if taken, would be an added support.

On rupee, the report said concerns over widening trade deficit, rise in global crude oil prices, and uncertainty over the general election outcome are expected to drag down the domestic currency in the near-term, even as a likely pause in the US Fed rate hike is expected to support the local unit.

D&B expects the rupee to depreciate to around 70.6-70.8 per US dollar during January this year.

 

 

To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.

To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.

Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.

Updated Date: Jan 23, 2019 14:01:32 IST

Also See