InvestorQ : With IIP remaining in positive for the fourth month, do you see RBI hiking repo rates?
Arti Chavan made post

With IIP remaining in positive for the fourth month, do you see RBI hiking repo rates?

Answer
image
Rutuja Nigam answered.
3 months ago
Follow

The index of industrial production or IIP for Jun-21, it is normally announced with a lag of one month, was up 13.6%. You are right that this is the fourth consecutive month of strong IIP growth, but that is entirely due to the base effect, since we are comparing with June 2020, which was a weak month at the peak of the pandemic. The 3 major components of IIP; mining, manufacturing and electricity grew 23.1%, 13% and 8.3% respectively.

While the RBI is surely waiting for the growth to bounce, it would prefer to see sustainable growth without the base effect. That is still not visible because the IIP absolute figure is still below the 2019 levels. However, high frequency indicators like e-way bills and tractor sales are robust. Also, PMI Manufacturing GST collections and rail freight hit new highs. In short, the indications are positive for RBI, but it may wait for more affirmation.

1 Views