A year of stagnation

While the Prime Minister’s Economic Advisory Council’s (PMEAC) 5.3% GDP forecast for FY14 always looked like a pipe dream, the latest IIP numbers for August suggest the number is likely to be around 4.5-4.6%. After flattering with a 2.8% growth in July, largely due to an inexplicable 15.6% hike in capital goods, industrial growth collapsed to a mere 0.6% in August with capital goods at minus 2%, a number more in keeping with order book positions of firms; consumer goods continued to contract for the fourth month running—non-durables for the ninth consecutive month.

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