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Fresh economic data suggests the economy continues to fare poorly. Retail inflation stayed on its upward trajectory, scaling 5.54% year-on-year, a whisker away from the 6% limit beyond which the Reserve Bank of India (RBI) must not let it rise. At this pace, it could prompt the central bank to act, even though core inflation, which excludes volatile food and fuel prices, remains subdued. If recent government interventions help tame runaway vegetable prices, RBI may get the breather it needs to resume monetary easing.

Worryingly, economic activity remains anaemic. Industrial production contracted 3.8% in October compared to the same month in 2018. The raft of targeted fiscal interventions and RBI’s rate cuts are yet to show any meaningful results. Big declines in power generation and capital goods production point to drops in consumption and investment demand. Perhaps, the policy action of recent quarters will help arrest these dismal trends, but the actual pressure to effect a revival will likely fall on next year’s budget. A swerve off the government’s fiscal glide path is expected, but it’s unclear if we can spend our way out of this slump.

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