January 2011 industrial output

India’s industrial output slowed to 3.7% in January, dragged down by sluggish manufacturing sector and a sharp decline in capital goods. The January data was an improvement on the revised 2.5% growth the sector posted in December and higher than market expectations. Industrial output has slowed in recent months and analysts say the impact of seven interest rate increases by the Reserve Bank of India (RBI) was visible. But economists expect industrial output to gather some pace in the months ahead as the statistical high base effect wears off. Industrial output in January 2009 stood at 16.8%. The mining sector rose 1.6% in January compared to 15.3% in the same month last year, while the key manufacturing sector expanded 3.3%. Manufacturing sector growth in January 2010 stood at 17.9%. Policymakers expressed concern over the sluggish industrial growth. FM Pranab Mukherjee said he was unhappy with the numbers despite the fact that the average growth was 8.3% in the first ten months. The electricity sector rose 10.5% this January compared to 5.6% in January 2010. Industrial output growth in the April-January period stood at 8.3%. But the performance of the capital goods sector remains a key concern. Capital goods fell 18.6%.

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