August IIP @ 2.7%

Industrial output gathered some pace in August with manufacturing and mining sectors showing some tentative signs of an upturn but the overall scenario still remains weak and economists said the central bank may ease tight monetary policy to revive growth.
Data released by the Central Statistics Office showed industrial output rose 2.7%, slower than the 3.4% in the same year-ago month but stronger than a decline of 0.2 in July.
The manufacturing sector, which accounts for nearly 76% of the index of industrial production, grew 2.9% in August compared to 3.9% expansion in the same year-ago month. The mining sector rose 2.9% in August compared to a decline of 5.5% in the same year-ago month. The industrial sector has been hit hard by high interest rates, stubborn inflation, high input costs and policy delays. The electricity sector remained a laggard rising 1.9% compared with a growth of 9.5% in August 2011. Policymakers said they expect a turnaround in the months ahead.
The capital goods sector, a barometer of industrial activity, continued to show signs of volatility. The sector fell 1.7% in August compared to a 4.0% expansion in the year earlier period. There were some positive signs in the consumer goods segment. Consumer goods rose 5% in August compared with 2.1% expansion in August, 2011, while consumer durables grew 4.0% — slower than the 5.5% expansion in the year earlier month. Consumer non-durables showed signs of a comeback rising 5.8% compared to a decline of 0.7% in the year-ago period.
Economists said they expect the industrial numbers to remain firm in the months ahead as sentiment improves and policy initiatives have their impact.
Economists said they expect the Reserve Bank of India to cut interest rates as the overall health of the industrial sector and the broader economy still remains weak.