The best news for Indian economy: Monsoon, inflation, industry

On Tuesday, official data forecast rains during the upcoming monsoon season to be above normal, retail inflation fell to a six-month low and factory output was up after three months of decline. The Indian Meteorological Department said that after two straight years of drought, India is likely to be showered with above-normal rains in the upcoming monsoon season with a probability of more than 94% precipitation. Then the Central Statistics Office said India’s factory output for February logged a growth of 2% after three months of decline, even as annual retail inflation fell to 4.83% in March from 5.26% in February. The annual food inflation for the month also showed a decline to 5.21% from 5.30%. But the manufacturing sector continued to be pressured, barely managing a growth of 0.7% in February, according to data released by the Central Statistics Office on Tuesday. Data on consumer price index also showed that for rural India, the annual inflation fell to 5.7% from 6.05%, while for the urban dwellers, the price rise in the 12-month period till March was 3.95%, as opposed to 4.30% for the like previous ended February. In the case of the Index for Industrial Production, the overall growth was mainly led by a 9.6% growth in electricity output, even as mining activity in February -- the latest period for which data is available -- expanded by 5%. “The prediction would be a great mood changer for industry, as revival of rural demand leads to a turn in investment cycles. This will take the economy to a higher trajectory of around 8% growth,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry. According to the Met’s prediction, the chances of a normal rainfall during this monsoon season was 30%, 34% for above-normal, and 30% for excess. On the flip side, chances of below-normal rain were just five percent and for deficient rain, nearly one percent.