Industrial output grows 4.1 percent; rate cut possible (Lead)

April 12th, 2012 - 8:45 pm ICT by IANS  

Pranab Mukherjee New Delhi, April 12 (IANS) India’s industrial output grew at a lower-than-expected 4.1 percent in February owing to sluggish performance of the mining and manufacturing sector, fuelling calls of a rate cut by the Reserve Bank of India for the first time in three years.

Finance Minister Pranab Mukherjee termed the data “disappointing” and indicated that the RBI might cut rates to revive investment and growth.

“These figures will have bearing on monetary policy announcement scheduled for next week. The government along with RBI will take required steps to revive activity in the economy,” Mukherjee told reporters, commenting on the monthly Index of Industrial Production (IIP) data.

The RBI is scheduled to announce the annual monetary policy for 2012-13 April 17.

Mining output grew at a sluggish 2.1 percent in February and manufacturing increased by 4 percent. The electricity sector, however, showed a good 8 percent growth, according to the monthly Index of Industrial Production (IIP) data released by the Central Statistics Office (CSO).

Meanwhile, the government has revised down the January factory output growth to 1.1 percent from 6.8 percent announced earlier.

The CSO has attributed the downward revision in IIP to an error in sugar production data. During the compilation of IIP for January 2012, the sugar production was wrongly taken as 134.08 lakh tonnes in place of actual figure of 58.09 lakh tonnes.

“This wrong figure was taken because of incorrect reporting by the Directorate of Sugar in the Ministry of Consumer Affairs, Food and Public Distribution,” the CSO said.

The cumulative growth in the factory output, measured in terms of IIP, for the period April-February, 2011-12 stands at 3.5 percent.

Electricity output increased by 8.7 percent in the first 11 months of the year and manufacturing production grew by 3.7 percent. However, mining output declined by 2.1 percent in the April-February 2011-12 period.

Reacting on the monthly data, R.V. Kanoria, president, Federation of Indian Chambers of Commerce and Industry (FICCI), said: “Growth of 4 percent in manufacturing in February 2012 is below the potential and a cause for concern. Unless urgent steps are taken to bring the reforms agenda back to the forefront, the industrial growth is likely to be modest.”

Chandrajit Banerjee, director general, Confederation of Indian Industry (CII), said: “In order to realise the budget projection of 7.6 percent GDP growth in 2012-13, it is necessary to use all policy levers to encourage growth and investment.

“It is time that the RBI focuses on getting growth back by sharply reducing interest rates,” he added.

As per “use-based” classification, production of basic goods grew by 7.5 percent, capital goods increased by 10.6 percent and consumer non-durables registered a growth of 5.1 percent in February.

However, intermediate goods and consumer durables showed negative growth of 0.6 percent and 6.7 percent respectively in February.

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