ASSOCHAM Reaction: WPI for May 2016

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Apex industry body ASSOCHAM said that rise in Wholesale Price Index (WPI) is in line with industry’s expectations as it got some upward movements through increase in prices of crude oil globally and policy measures introduced by the Reserve Bank of India (RBI) in its first bi-monthly policy in April 2016.

“However, policymakers need to check and address through supply side responses the continuous rise in prices of commodities like pulses, food articles, cereals, wheat and other items of national interest that have been soaring continuously,” said Mr D.S. Rawat, secretary general of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“Though WPI figures may give some relief to manufacturers and producers since earlier it was hampering their pricing power, profitability and limiting their potential to increase capital expenditure,” said Mr Rawat.

“The declining trend in index of industrial production (IIP) and rising WPI may have negative impact on country’s economy in the long run since it states that prices may be increased due to a cut in supply which should not be an issue as India has been leading various growth campaigns to attract investments and boost manufacturing,” said the chamber’s secretary general.

Considering that arrival of monsoon is slated to delay, it would have an impact on inflation being represented by consumer price index (CPI) which the RBI is targeting to hold at 5 per cent by March 2017 which might affect RBI’s capacity to further reduce the interest rates.

As such ASSOCHAM has suggested the government to take pro-active steps to check the supply situation in the country and help the industry to maintain its growth momentum.

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