| Accompanying this decline was a downward revision of the data for April by the Central Statistical Organisation from 13.6 per cent to 12.3 per cent. |
| The manufacturing sector saw a decline in growth to 11.9 per cent from 13.3 per cent during the same period last year. This is largely on account of weak growth of consumer goods (9.8 per cent against 10.5 per cent in May 2006) and intermediate goods (9.1 per cent against 12.5 per cent). |
| Consumer durables reflected the sharpest impact of higher interest rates with growth declining to 2.6 per cent in May 2007 from 17.5 per cent in the same month last year. Consumer non-durables, on the other hand, grew 12.5 per cent, against 8.2 per cent last May. |
| Basic goods and capital goods also grew faster, as did the electricity sector (9.4 per cent against 5 per cent last year), suggesting that growth impulses were still strong. |
| Overall, 14 out of 17 industry groups showed positive growth, the exceptions being transport equipment and parts (-0.1 per cent) and other manufacturing industries. Paper and paper products showed flat growth. |
| "The declining trend in the Index of Industrial Production (IIP) will continue. However, growth in capital goods will remain strong. The impact of the interest rate hike will be further reflected in basic goods. The first half of the financial year may end with about 10 per cent growth in the IIP. There may be a further dip in the second half of the fiscal. So I see a soft landing of the IIP, not a sharp decline," said Abheek Barua, chief economist, HDFC Bank. |
| As part of its measures to control inflation, the Reserve Bank of India increased its key overnight lending rate six times in the past 18 months and raised its cash reserve ratio three times since December last year. This, in turn, prompted banks to raise lending rates, especially on retail loans. |
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