Economy on road to recovery as industrial production goes up and inflation eases

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Indian economy is on the road to recovery after the devastating blow from the coronavirus pandemic with industrial production expanding and retail inflation easing, official monthly data released on Friday shows.</p>
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The Index of Industrial Production (IIP) grew 1% for December 2020 with the key manufacturing sector recording a 1.6% growth, according to figures compiled by the Ministry of Statistics and Programme Implementation (MoSPI).</p>
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The factory output in the country had contracted 1.9% in November and edged up 0.4% in December 2019.</p>
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Power generation grew 5.1% in December 2020. However, the mining sector output declined by 4.8%.</p>
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Industrial production has been hit due to the Covid-19 pandemic since March last year when IIP suddenly shrank by as much as 18.7% in the month.</p>
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Consumer Price Index inflation eased to 4.06% in January 2021, mainly on account of a decline in vegetable prices, the data show.</p>
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The inflation based on CPI was 4.59% in December 2020 and 7.6% in January 2020.</p>
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The rate of price rise in the food basket was 1.89% in January, significantly down from 3.41% in December. This could give the RBI more headroom to follow a soft money policy with the easing of key policy rates to spur growth in the months ahead.</p>
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The RBI, which mainly factors in the retail inflation while formulating its monetary policy, has kept its CPI inflation target at 4 per cent (+,- 2 per cent) for stable growth.</p>