- While the latest retail inflation and factory output data are optimistic, evidence of a growth revival is not yet robust.
- The drop in retail inflation isn’t significant enough to induce a cut in interest rates by RBI.
- Food inflation, core retail inflation have not seen significant drop.
- Poor monsoons may result in higher monsoon prices.
- Global unrest has surged oil prices, this will increase the costs of oil imports. One possible backlash from this is rise in retail inflation.
- Subsidy burden may rise up adding to fiscal deficit.
- A positive growth in factory output, which has been negative for more than 3 months, while optimistic, does not necessarily signal rebound of the economy.
- Lead indicators point towards a positive scenario, but only periodic evaluation will help us draw firm conclusions over economy.
- Read at: http://www.thehindu.com/todays-paper/tp-opinion/premature-optimism/article6117945.ece