PARAGRAPH,WORDS AND MEANINGS
TOPIC OF THE DAY:-“In slow mode: on manufacturing and inflation data”
Manufacturing, inflation data give monetary policy makers room for an interest rate cut
Manufacturing activity in the country continues to remain becalmed. The latest Index of Industrial Production data show that output across the broad sector expanded 1.3% in January, a clear loss of momentum from the 3% pace in December and a drastic slowdown from the 8.7% growth seen in January 2018. Overall, industrial output growth slumped to 1.7%, from 2.6% in December, and 7.5% a year earlier, as production in 12 of the 23 industry groups that comprise the manufacturing sector shrank from a year earlier. These are quick estimates that are likely to be revised. But the fact that key job-creating industries, including textiles, leather and related products, pharmaceuticals, rubber and plastic products, and motor vehicles, reported contractions hardly bodes well for the real economy. A look at the use-based classification of industries also gives little cause for cheer. Capital goods, a closely watched proxy for business spending plans, contracted 3.2%, a telling contrast with the 12.4% expansion posted 12 months earlier. A sustained revivalon this vital front may still be some time away. A recent survey by IHS Markit of business activity expectations, conducted over two weeks in the latter half of February, shows that Indian businesses plan to curb outlays on hiring and capital spending, with sentiment on capex at a one-year low. And growth in consumer durables output was an anaemic 1.8% (7.6% in January 2018), another clear sign that spending on consumption of non-essentials remains in search of favourable winds.
If the IIP poses cause for concern, retail inflation data hardly provide much reassurance. While price gains measured by the Consumer Price Index accelerated to a four-month high of 2.57% in February, it is the persistent deflationary trend in the prices of some farm items that is deeply disquieting, reflecting as it does a collapse in pricing power in the agrarian heartland. Vegetables, fruits and pulses and products all posted negative rates of inflation from a year earlier, of –7.69%, – 4.62% and –3.82% respectively. While urban consumers may cheer the increased affordability of vegetables and fruits, rural demand for manufactured goods will remain depressed unless there is a meaningful turnaround in the farm sector’s economic fortunes. Looking ahead, with Saudi Arabia committed to deepening its production cuts in order to keep crude oil prices well-supported, it appears unlikely that India’s fuel and energy costs will stay soft for much longer. And with political parties sure to open the spending spigot in a bid to woo voters, inflationary impulses will quicken. For now, though, with growth slowing and inflation still comfortably within the Reserve Bank’s 2%-6% target range, monetary policy makers would feel justified in pressing ahead with one more interest rate cut at their meeting next month.
WORDS AND MEANINGS:-
1) slumped
Meaning : sit, lean, or fall heavily and limply.
Synonyms : collapse
Antonyms : build
Example : “she slumped against the cushions”
2) shrank
Meaning : become or make smaller in size or amount.
Synonyms : diminish
Antonyms : develop
Example : “the workforce shrank to a thousand”
3) estimates
Meaning : roughly calculate or judge the value, number, quantity, or extent of.
Synonyms : appraisal
Antonyms : ignorance
Example : “the aim is to estimate the effects of macroeconomic policy on the economy”
4) sustained
Meaning : continuing for an extended period or without interruption.
Synonyms : constant
Antonyms : discontinuous
Example : “several years of sustained economic growth”
5) revival
Meaning : an improvement in the condition, strength, or fortunes of someone or something.
Synonyms : recovery
Antonyms : destruction
Example : “a revival in the fortunes of the party”
6) curb
Meaning : a check or restraint on something.
Synonyms : ledge
Antonyms : inside
Example : “plans to introduce tougher curbs on insider dealing”
