In a double blow to the Economy, the factory output for the month of December tanked while the retail inflation jumped to a near 68-month high in January. As per the data released by the statistics office, the industrial output shrank 0.3 percent in December vis-à-vis a 1.8 percent rise in November. Further, April-November industrial growth was 0.5 percent in comparison to 4.7 percent in the year-earlier period.

In another development, the Consumer Price Index (CPI) highlighted that the retail inflation surged to 7.59% in January from 7.35% in December. The jump in inflation in a likely indication for the Reserve Bank of India (RBI) to stop easing credit rates in the country's financial market. Notably, the numbers are in complete contradiction to finance Minister Nirmala Sitharaman's statement where she reiterated that the economy is under the stage of repair and green shoots have started to be visible in the economy.

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Workers fasten iron rods together on a metro pillar under construction in New Delhi, India  (representational image).Reuters file

Coronavirus to be blamed for the debacle?

Economists have argued that the ongoing outbreak of Coronavirus has badly impacted the global trade which may further erode the industrial production. Upasna Bhardwaj, an economist at Kotak Mahindra Bank, "We expect third-quarter growth to be muted and there could be supply-side disruptions for some commodities we import from China due to the coronavirus." Financial daily, the Economic Times reported that the manufacturing output shrank 1.2 percent in contrast to 2.9 percent growth during the same time period last year. Moreover, the electricity generation also witnessed a slump for the fifth month in a row, tanking 0.1 percent in December as against 4.5 percent growth in the year-ago.

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An Indian customer purchases vegetables at a market in SiliguriDIPTENDU DUTTA/AFP/Getty Images

Next policy review in April

The next meeting of the Monetary Policy Committee is scheduled in the month of April. Now with the number going against the central bank's expectation, it is highly unlikely that the RBI will go for further rate cuts. Aditi Nayar, principal economist at ICRA said, "Regardless of the level of the CPI inflation, the stance of monetary policy is likely to be retained as accommodative, for as long as the monetary policy committee considers the output gap to be negative, in our view."