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Industrial production grows 5.7% in November 2016

India’s factory output, measured by the Index of Industrial Production (IIP) has registered 5.7% growth in November 2016 as against 1.9% in October 2016.

It is the fastest growth recorded in more than four years and is largely on account of a low base effect. It also does not display the negative effects of demonetisation as production cycles in manufacturing take longer to adjust to any demand change.

Key Facts
  • Manufacturing sector grew by 5.5% in November 2016.
  • Mining sector output rose 3.9%.
  • Electricity generation sector increased 8.9%.
  • Capital goods output surged 15%.
  • Consumer durable output jumped 9.8%
  • Consumer non-durable production increased 2.9%
  • Overall growth in consumer goods output was 5.6%.

About Index of Industrial Production (IIP)

The IIP is compiled and published every month by Central Statistics Office (CSO) of the Union Ministry of Statistics and Programme Implementation. It covers 682 items comprising Manufacturing (620 items), Mining (61 items) & Electricity (1 item). The weights of the three sectors are 75.53%, 14.16%, 10.32% respectively and are on the basis of their share of GDP at factor cost during 2004-05. The eight Core Industries comprise nearly 38 % of the weight of items included in IIP.

Base Effect: It is basically the consequence of abnormally high or low levels of inflation in a previous month distorting headline inflation numbers for the most recent month.

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PM Narendra Modi inaugurates India’s first international exchange at GIFT city

Prime Minister Narendra Modi inaugurated India’s first international exchange India INX at the International Financial Service Centre (IFSC) of GIFT (Gujarat International Financial Tech) City Gandhinagar, Gujarat.

India INX is a wholly-owned subsidiary of the Bombay Stock Exchange (BSE). It will enable Indian firms to compete on equal footing with offshore firms.

Key Facts
  • India INX will initially trade in equity derivatives, currency derivatives, commodity derivatives including index and Stocks. Subsequently, it will offer depository receipts and bonds once required infrastructure is ready.
  • It will work for 22 hours in a day working from sunrise to sunset i.e. starting when Japan exchanges begin and close when US markets end. It will have 250 trading members including commodity and overseas brokers.
  • India INX is one of the most advanced technology platforms with turnaround time of 4 seconds. It will facilitate international investors and NRIs to trade from anywhere in the world.\
  • It will provide benefits in terms of waiver of security transaction tax, commodity transaction tax, dividend distribution tax, long term capital gain tax and income tax.

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India’s GDP growth expected to be slower at 7.1% in 2016-17: CSO

According to growth projection released by the Central Statistics Office (CSO), India’s Gross Domestic Product (GDP) growth is expected to grow at a slower pace at 7.1% in 2016-17 as compared to 7.6% in 2015-16.

This estimate is in sync with the Reserve Bank of India’s (RBI) economic growth forecast and is largely based on data from the first seven months of the year.  The slowdown is chiefly due to an industrial slowdown.

Key Facts
  • Per capita net national income during 2016-17: estimated to be Rs.1,03,007, rise of 10.4% as compared to Rs. 93,293 during 2015-16 with the growth rate of 7.4%.
  • Agriculture, forestry and fishing sector: likely to show a growth of 4.1% during 2016-17, as against the previous year’s growth rate of 1.2%.
  • Manufacturing sector: It is estimated to grow by 7.4% in 2016-17 as compared to growth of 9.3% in 2015-16.
  • Wholesale price index (WPI): food articles has risen by 6.9%, manufactured products 2.0%, and electricity -1.4% and all commodities 2.8% during April-November 2016-17 period.
  • Consumer price index: It has shown a rise of 5.0% during April-November 2016-17.

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Note: This estimate does not factor in the impact of the Union Government’s demonetization decision announced on November 8, 2016. The outcome-based numbers from the September to December 2016 quarter will be captured in the next growth projection to be released in February 2017.

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