Industrial output in July remained nearly flat as dismal performance in the manufacturing and mining sectors held back expansion, prompting calls for easing interest rates to revive growth.
Data released by the Central Statistics Office (CSO) showed factory output in July grew a 0.1% compared to a 3.7% expansion in the previous yearago period. It was marginally better than the 1.8% fall recorded in June.
The manufacturing sector, which accounts for more than 75% of the index of industrial production, continued to remain sluggish falling 0.2% in July compared to a 3.1% growth in the same year-ago month. The mining sector, which is reeling under the weight of policy issues, fell 0.7% in July compared to a feeble expansion of 0.7% last year. The capital goods sector, which is a key gauge of industrial activity, continued to remain in the doldrums. It fell 5% in July compared to a decline of 13.7% in the same month last year. The sector has remained choppy due to volatile data for the past several months. Economists have expressed concern over the poor data quality and the difficulty in predicting a trend due to shoddy data.
The dismal data fuelled expectations that RBI may cut interest rates when it reviews monetary policy next week.