The Indian economy is in a "depressive state", post the demonetisation, says the Associated Chambers of Commerce and Industry of India (ASSOCHAM)
Reacting to the fall in Wholesale Price Index (WPI) numbers for November, the trade body attributed it to this depressed state of the economy, implying that demonetisation was responsible for it. The ASSOCHAM expected the WPI numbers to fall further in the coming months as well as any increase in crude oil prices stood ruled out. The OPEC (Organisation of Petroleum Exporting Countries) has decided not to reduce output just to raise oil price . Additionally, the stiumulus given by the US and other developed countries will take the off pressure on consumption demand, again ensuring WPI does not rise.
The November 2016 WPI number stood at 3.15 per cent as compared to 3.39 per cent during the previous month.
ASSOCHAM urged policy makers to take some corrective actions to arrest the fall in WPI as this would impact the IIP (Index of Industrial Production) numbers, which dropped by 1.9 per cent in October, ahead of the demonetisation. Given "prolonged effect of ban on currency of high denomination which will create downward price pressure on industrial output", any fall in WPI would take the IIP numbers down even more, the trade body apprehends.
