"The IIP numbers remain weak but are better than previous month. Such growth rates, however, are not acceptable," Planning Commission Deputy Chairman Montek Singh Ahluwalia said while commenting on the industrial production data.
The Index of Industrial Production (IIP) has slipped to 2.4 per cent in May, 2012 from 6.2 per cent in the same month last year. The data released today also revealed that there was a contraction in April at (-)0.9 per cent, as against 0.1 per cent growth reported earlier.
According to Economic Affairs Secretary R Gopalan, "IIP numbers have shown improvement compared to previous month... electricity machinery production is showing decline...(the government will be) studying if this is due to imported power equipment...Believe there is some turnaround."
During the first two months of this fiscal, April-May, the industrial growth rate decelerated sharply to 0.8 per cent from 6.2 per cent in the same period of 2011-12.
What is worrying, however, is that the output of the capital goods sector - machinery and equipment used by industry - declined by 7.7 per cent in May, as against a growth of 6.2 per cent in the same month last year. The mining sector output too contracted by 0.9 per cent in May, compared to 1.8 per cent growth.
Pitching for rate cut by RBI in its forthcoming policy review on July 31, Assocham President Rajkumar Dhoot said, the central bank should shift from "status quo" approach to "growth-oriented" stance.
Some economists said, however, that RBI was likely to keep the key rates unchanged. MORE
