Growth of factory output plunged to an 18-month low of 2.7% in November, triggering concerns about a phase of slower industrial activity and resurgent inflation. Even as analysts were surprised at the extent of the slowdown, the growth numbers have served a poser to the Reserve Bank of India (RBI) ahead of its key monetary policy meeting on 25 January: Will RBI keep its eye on the poor industrial growth numbers or on containing growing inflationary pressures in the economy? While growth was expected to slow down in the post-Diwali month especially because of a high base last year, the data surprised analysts and policymakers on the lower side. Finance minister Pranab Mukherjee said the deceleration in the Index of Industrial Production (IIP) and high inflation could adversely impact the economy, and promised to take corrective steps to push up factory output.
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