India's Index of Industrial Production, or IIP, with base 2004-05, for the month of March contracted to 3.5 percent for the fist time in five months, mainly due to sluggish growth in manufacturing, mining, capital goods and intermediate goods.
Data released by the Central Statistical Organization of the Ministry of Statistics & Program Implementation on Friday showed that the IIP for March had a growth rate of 3.5 percent, significantly down from 9.4 percent for the corresponding month last year.
Cumulative index of industrial production for the 12 months of the current fiscal (with base year 2004-05) stood at 2.8 percent, down from the 8.2 percent in the corresponding period of last fiscal.
The data kept the estimated growth rate for February unchanged at 4.1 percent as per base year 2004-05.
Manufacturing sector's growth rate in March, with a weightage of 75.53 percent, witnessed a negative growth of 4.4 percent, compared to a positive growth of 11.0 percent in the corresponding month of the preceding year. Power sector growth slowed down to 2.7 percent, from the 7.2 percent for the corresponding month last year. Mining sector too showed a negative growth at 1.3 percent, compared to a positive growth of 0.4 percent in March last year.
In terms of industries, ten of the 22 industry groups showed a positive growth in March, compared to the corresponding month of the preceding year.
As per the use-based classification, capital goods sector growth recorded a negative growth of 21.3 percent, compared to a positive growth of 14.5 percent last year.
In March, basic goods had a slow growth of 1.1 percent, compared to 6.4 percent of March last year, while intermediate goods growth was negative at 2.1 percent, compared to a positive growth of 3.0 percent for the corresponding month last year.
In March, growth rate of consumer durables sector recorded a growth of 0.2 percent, drastically down from 14.9 percent as on last March, whereas non-durables recorded a lower growth of 1.0 percent from the 11.9 percent for the same month last year. As such, the growth rate of overall consumer goods contracted to 0.7 percent, compared to an expansion of 13.2 percent of last March.
India's eight core industries growth having a combined weight of 37.90 percent in the IIP slowed down to 2.0 percent in March, compared to 6.8 percent in the previous month and 6.5 percent last March, mainly due to contraction in the output of natural gas and crude oil,
The Reserve Bank of India (RBI) is expected to cut the repo rate further at its next policy meeting in June, considering the drop in IIP for the month under report. The apex bank already indicated that the interest rates will be trending downwards in the coming days.
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