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Combined with the retail inflation climbing up to 7.59 per cent in January, the developments casts a shadow over the economy‘s possible recovery in third quarter of FY20.
Capital goods contracted by 18 per cent in the month of December compared to 8.6 per cent contraction in November.
Industrial production had contracted for three months till it changed course in November.
The core sector, however, had grown at 1.3 per cent in December after contracting for four months.
On the inflation front, higher vegetable prices pushed up the CPI index further up thereby shrinking the room for a further cut in rates by the RBI.
In its February policy, the RBI maintained status quo on account of higher inflation. However, it brought in long term repos for 1 and 3 years and eased CRR norms to further boost liquidity in the market as a means to stimulate growth.
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