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A long road ahead

A long road ahead
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First Published: Tue, Jan 13 2009. 01 00 AM IST
Updated: Tue, Jan 13 2009. 01 00 AM IST
We’re at that point when even a small bit of good news has to be dismissed as illusory. That’s why Monday’s news of a spike in industrial production data for November is not worth getting excited about.
After October’s contraction of 0.3%, output grew by 2.4% in November. In most financial quarters, this is being seen as “unexpected”. But before we put too much faith in a single data point, it’s worth considering why November was so rosy.
The festive season always buoys economic figures. A breakdown of the November data shows this: Growth in capital goods shrank, while it rose for consumer non-durables to replace the inventory used up the previous month during Diwali.
Thanks to a US-led global slowdown, markets the world over are slumping. Instead of reacting to changes in the short term, we need to admit that we’re in for the long haul.
There is room here for government action. More than temporary rate cuts or spurts of fiscal spending which may worsen our finances, permanent reforms can buoy our economy for good.
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First Published: Tue, Jan 13 2009. 01 00 AM IST