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Mining and capital goods disappointed-production in these segments fell 2.9 per cent and 1.8 per cent in January, against declines of 3.36 per cent and 0.56 per cent in December, respectively, official data showed on Tuesday. As the contraction in the capital goods segment reflected the low investment cycle in the country, industry chambers reiterated their demand of a 50-basis point cut in the policy rate. Though the finance ministry backed this, it didn't specify the extent of the cut.
Economists expect a 25-basis point cut in the policy rate.
In January, industrial growth, as measured by the Index of Industrial Production (IIP), stood at one per cent. For the April-January period, too, it stood at one per cent, against 3.4 per cent in the year-ago period, data released by the Central Statistics Office (CSO) showed.
"The modest improvement in IIP in January is too early to conclude a sustainable turnaround in IIP," said YES Bank chief economist Shubhada Rao.
"Inflation numbers have also come down. So, there is certainly a case for (giving) a further impulse to growth," said Department of Economic Affairs Secretary Arvind Mayaram.
Multimedia | IIP numbers decoded
After industrial production grew 8.3 per cent in October, it contracted 0.84 per cent in November. In December, it fell 0.49 per cent.
In January, manufacturing output increased 2.7 per cent, against a fall of 0.7 per cent in December. In January 2012, manufacturing output had risen 1.1 per cent.
The CSO's advanced estimates had pegged manufacturing growth in 2012-13 at 1.9 per cent. For this, manufacturing has to increase 3.8 per cent in the quarter ending March. Manufacturing output data for February is expected to be better than the data for January because of a low base effect---in February 2012, the manufacturing index stood at 186.8 points, against 188.6 points in January. However, an analyst said the automobile sector didn't suggest a recovery. For March, the base would rise to 198.7 points (recorded in March 2012).
For the first 10 months of this financial year, manufacturing grew 0.9 per cent, against 3.7 per cent in the corresponding period of 2011-12.
Within manufacturing, production of capital goods fell for the ninth month. The fact that the decline in January was steeper than in December showed lacklustre investment. For the April-January period, capital goods contracted a whopping 9.3 per cent, against 2.9 per cent in April-January 2011-12.
In the consumer durables segment, the decline was slow, while the non-durables segment saw a recovery. After contracting 8.1 per cent in December, consumer durables fell just 0.9 per cent in January, against a decline of 7.5 per cent in the year-ago period. Room air conditioners, part of this segment, rose 31.6 per cent, as companies cleared inventories. In January, commercial vehicles, however, declined 17.9 per cent year-on-year.
Consumer non-durables rose 5.3 per cent in January, against a fall of 0.4 per cent in December. In January 2012, this segment had risen 10.6 per cent.
In the manufacturing sector, 11 of the 22 industry categories showed growth in January. In December, 10 categories had recorded growth.
