Industrial growth remained sluggish in February raising expectations that the Reserve Bank of India (RBI) may cut interest rates when it reviews monetary policy on April 17 as policymakers rush to revive growth and boost sentiment. Data released by the Central Statistics Office showed industrial production growth slowed to 4.1% in February compared to 6.7% expansion in the previous year-ago month. The government also sharply revised the January production number to 1.1% growth from the previously reported 6.8% expansion and attributed it “incorrect reporting” of sugar production data for January. The manufacturing sector continued to remain subdued, posting a growth of 4.0% compared to 7.5% in the yearago period, while mining rose 2.1% compared to 1.2% in February 2011. The electricity sector notched robust growth in February and rose 8% compared to 6.8% in the yearago period. Economist said the February data raised expectations of a cut in interest rates against the backdrop of easing inflation and slowing growth. The RBI will review monetary policy on April 17 and is widely expected to ease its tight policy to revive growth. The RBI has raised interest rates 13 times since March 2010 to tame stubbornly high inflation, but slowing growth and investment has drawn calls for a reduction in interest rates. Finance minister Pranab Mukherjee vowed to take steps to boost investment. The industrial sector has been hit hard by high interest rates, rising input prices and slowing global economy which has hurt demand. Delay in implementation of policies and regulatory clearances have hurt projects.
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