IIP RECOVERS BUT MANUFACTURING STILL DISAPPOINTs.

  

The IIP for the month of July 2017 was slightly higher at 1.2% compared to the negative growth shown in the month of June. However, manufacturing continued to disappoint. This IIP number was important for a variety of reasons. For the first quarter ended June 2017, the GDP had come at a multi-year low of just 5.7%. This had positioned the Indian economy a full 100 points below the Chinese economy in terms of economic growth. Even on the GDP front the major pressure came from the manufacturing sector with the SME sector being the worst hit due to the lag effect of demonetization. Additionally, the precautionary strategy around GST was also coaxing manufacturers to focus more on inventory depletion rather than on fresh production.