Industrial production growth slows to 2.7 %

Industrial growth slowed to 2.7 per cent in August because of poor show by the manufacturing sector and contraction in capital goods output, which may prompt the Reserve Bank to cut key interest rates in its
second quarter policy review later this month.

Industrial output in the April-August period this fiscal was 0.4 per cent, down from 5.6 per cent in the same period in 2011-12, according to the official data released on Friday.

Growth in overall factory output, as measured by the Index of Industrial Production, was 3.4 per cent in August last year.

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The manufacturing sector, which constitutes over 75 per cent of the index, grew at slow rate of 2.9 per cent in August, as against 3.9 per cent in the same month last year.

The production growth in the manufacturing sector in April-August was flat, as against 6 per cent growth in the same period in 2011-12.

Capital goods output contracted by 1.7 per cent in August, as against 4 per cent growth in August, 2011.

Output of capital goods contracted in the April-August period by 13.8 per cent, as against growth of 7.3 per cent in the 2011-12 period.

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However, mining output in August grew by 2 per cent as against contraction of 5.5 per cent in same month last year.

Consumer goods production was up 5 per cent in August as compared to a meagre growth of 2.1 per cent in same month last year.

During the April-August period of this fiscal, the growth in the segment was 3.5 per cent, compared to 4.4 per cent in the five month period a year ago.

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In all, 13 of the 22 industry groups in the manufacturing sector showed positive growth in August.

Consumer durables production growth slowed to 4 per cent in August, compared to 5 per cent in the same month last year.

The output of these goods registered a growth of 5.7 per cent during April-August, as against 4.5 per cent in the same period in 2011-12.

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The consumer non-durables output growth improved to 5.8 per cent in August, as against a contraction of 0.7 per cent in the same month last year.

This segment grew by 1.6 per cent in first five months of this fiscal, as against 4.3 per cent in the same period of 2011-12.

The basic goods production growth slowed to 2.8 per cent in August, as against 5.8 per cent a year ago.

During April-August period, this segment recorded a growth of 2.8 per cent compared to 7.6 per cent in the five months of last fiscal.

. . .

Power generation witnessed a dip in growth rate as it declined to 1.9 per cent during August, compared to 9.5 per cent in the same month a year ago.

Electricity generation increased by 4.8 per cent in the April-August period of this fiscal, as against 9.5 per cent in the same period in 2011-12.

The Reserve Bank will come out with second quarter monetary policy review on October 30.

The central bank has been holding key interest rates for some time in view of sticky inflationary pressures.