IIP growth at 13 month low

Industrial growth slipped to a 13-month low of 7.1% in June as manufacturing output dropped, but economists don’t see this turning into a trend. Also, this is for the first time in nine months that industrial expansion, as measured by the Index of Industrial Production (IIP), was in single digit, as two segments — mining and electricity generation — posted lower numbers than a year ago. Finance minister Pranab Mukherjee said industrial growth of 7.1% in June, lowest in the last 13 months, was below his expectations. “I expected it to be a little better,’’ Mukherjee told reporters. Experts said RBI will not relax its hawkish monetary stance, simply because industrial numbers are bad for a month. Also, food inflation again rose to double digits — 11.4% during the week ended July 31 — which may not allow RBI to take a pause from hiking key policy rates in its monetary review next month. Experts attributed the sluggish pace of growth to a high base effect. The expansion in factory output was quite high at 8.3% a year ago and it makes even a large hike now seem modest.