Economy Update -IIP

E: research@sumedhafiscal.com www.sumedhafiscal.com

Dec 13, 2013

IIP Numbers

Industrial activity weakened for the month of October coming in at a negative 1.80%, down from a positive growth rate of 2% in the month of September 2013. The figure was way below expectation which were around 1.2%. This means that the economy still remains fragile at best. Manufacturing which has the maximum weightage was down by almost 2%. The capital goods sector remains weak clocking a growth rate of 2.30% which is lower than the rate clocked in the same corresponding period last year. The consumer durable sector also remains fragile with a negative growth rate on a low base already. The growth rate came in at -12% compared to -10.8% in the month of September 2013. Thus we have low capital goods sector growth which again is an indication of low economic growth as well as poor investment activity in the country. Weakness also prevails for the Indian economy as far as inflation is concerned. The CPI came in at 11.24% compared to 10.17% for the month of October. Looking at the current situation, inflation figures will not come down in a hurry. It is becoming evidently clear that the situation in India is heading towards stagflation, with low growth (poor investment activity), consumption story which is on a downward trend and high inflation (both wholesale and retail). Historically, it has been a very difficult and complex situation to deal with. A trade off will have to me made which will have unintended consequences for the economy.
IIP General Rate (%)

20.00 15.00 10.00 5.00 0.00 -5.00 -10.00

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

Source: CSO, SFSL Research Page | 2

Sumedha Fiscal Services Limited | www.sumedhafiscal.com

For private circulation only

Sep-13

Source: CSO, SFSL Research

IIP Numbers

Jul-13 Apr-13
Jan-13 Sep-12 May-12

May-13

Jan-13 Oct-12

Mining & Quarrying (%)

Jul-12 Apr-12
Jan-12 Sep-11 May-11 Jan-11

Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10

60 50 40 30 20 10 0 -10 -20 -30 -40
Sep-10 May-10 Jan-10

Capital Goods (%)

Jan-10

15

10

-10

-5

Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12

Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12

Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10

Electricity (%)

Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10

16 14

12

10 8

6 4 2

-2 -4

20

15

10

-5

-10

-6

Sumedha Fiscal Services Limited | www.sumedhafiscal.com

Manufacturing (%)

For private circulation only

Page | 3

Oct-13

Oct-13 Jul-13
Jul-13 Apr-13 Jan-13 Oct-12

Source: CSO, SFSL Research Page | 4

Oct-13

IIP Numbers

Apr-13 Jan-13 Oct-12

Consumer Non-Durables (%)

Intermediate Goods (%)

Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10
50 40 30 20 10 0
Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Jul-11 Oct-11 Jan-12 Apr-12

Jul-12

-10

Jul-13 Apr-13 Jan-13 Oct-12

Jul-13 Apr-13 Jan-13 Oct-12

Basic Goods (%)

Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10

Consumer Durables (%)

Jul-12

Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10

12

10

-2

-4

70

60

50

40

30

20

10

-10

-20

Sumedha Fiscal Services Limited | www.sumedhafiscal.com

Oct-13

-10

20

15

10

-5

Oct-13

For private circulation only

IIP Numbers

Sumedha Fiscal Services Limited

Geetanjali Apartments, Flat 6A, 8B Middleton Street, Kolkata 700071 Ph: 033 22298936/6758/3237/4473, Fax: 033 22264140/ 033 22655830 E-mail: kolkata@sumedhafiscal.com, research@sumedhafiscal.com Website: www.sumedhafiscal.com

Branches
AHMEDABAD Tel: +91 79 3002 3337 Fax: +91 79 2646 0394 ahmedabad@sumedhafiscal.com MUMBAI Tel : +91 22 4033 2416 / 4033 2400 Fax : +91 22 2498 2878 mumbai@sumedhafiscal.com BANGALORE Tel : +91 80 4124 2545/46 Fax : +91 80 4124 2547 bangalore@sumedhafiscal.com NEW DELHI Tel : +91 11 4165 4481/82 Fax : +91 11 4165 4483 delhi@sumedhafiscal.com CHENNAI Tel : +91 44 4212 5901 Fax: +91 44 4212 5901 chennai@sumedhafiscal.com HYDERABAD Tel: +91 40 4020 2826 Fax: +91 40 4020 2826 hyderabad@sumedhafiscal.com

Disclaimer
This document is only for private distribution and should not be reproduced or redistributed without prior permission. Sumedha Fiscal has taken due care and caution in preparing this document. However, it does not guarantee the accuracy, adequacy, completeness and reliability of any information. This report is only for the purpose of information and not to be interpreted as an offer to sell or buy any securities. Neither Sumedha Fiscal Services nor any person associated with it is liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. Recipients are advised to use their own judgmental view to take a call. Sumedha Fiscal Services may provide or has provided corporate finance, investment banking or other advisory services to the companies referred to in this report.

Sumedha Fiscal Services Limited | www.sumedhafiscal.com

For private circulation only

Page | 5