Manufacturing sector continues to drive the Indian economy, even though the growth has moderated in the much-hyped mobile telephony and civil aviation sector, the Reserve Bank said in a report.

The Macroeconomic and Monetary Developments, First Quarter Review 2007-08, released by the central bank in Mumbai on Monday said manufacturing sector expanded by 12.7 per cent during the April-May period, emerging as a key driver for 11.7 per cent growth in industrial production.

The manufacturing sector's robust performance was largely contributed by machinery and equipment, food products, basic metal and alloy industries and chemicals and chemical products, the RBI said.

Moderation was, however, witnessed in new cell phone connections, tourist arrivals, export cargo handled by civil aviation, air passengers, cement and steel during this fiscal so far, it said.

Bank deposits and non-food credit offtake increased and so did exports of BPO and IT-enabled services, which helped in sustaining the growth of the sub-sector financing, insurance, real estate and business services, the RBI said.

The higher growth in food products and wood and wood products, could be partly attributed to the base effect, it said, adding that while growth in the mining sector remained subdued, that of the electricity sector was higher than during the year-ago period.

The consumer goods sector saw strong growth in April-May this year on the back of acceleration in the growth of non-durables sub-sector which was due to higher production of food products, cigarettes and non-cotton cloth, the RBI said.