LD IIP TWO

With industry well on the way to recovery, experts feel
the RBI and the government can now focus on combating
inflation. But, there is no consensus on whether RBI should
hike interest rates for this purpose or not.

"Origin of this is in the food shortage. So, rather than
RBI, the government here has to take action. RBI may take a
view on interest rates, but what I understand is that policy
rates are not going to be changed," Tendulkar said.
Crisil principal economist D K Joshi said the RBI could
start mild tightening on rates by January.
In the context of the country facing surging food
inflation, which climbed to 19.05 per cent as of November
fourth week, it was heartening that processed food production
expanded by 2.4 per cent against negative growth in preceding
months. For the first seven months, food production contracted
by 10 per cent.
It must be noted that this category does not represent
unorganised food sector, but processed food items are consumed
mainly by urban Indians.
Within manufacturing, consumer durables production
expanded by 21 per cent in October against (-)1.6 per cent a
year ago. This could partly be attributed to revival in demand
due to the festive season.
Within consumer durables, auto industry reported double
digit sales growth in October.
Another segment of consumer goods, non-durable consumer
products, also recorded strong growth, with their production
expanding by 8.1 per cent against (-)0.6 per cent a year ago.
(More) PTI TAN
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