India’s industrial output growth fell in November, dragged down by sluggish manufacturing, mining and capital goods sectors, fuelling expectations of an interest rate cut later this month to bolster faltering growth. But economists said despite the disappointing data there were still signs of a feeble recovery in some sectors and urged policymakers to implement reforms to help accelerate growth.
Data released by the Central Statistics Office (CSO) showed the index of industrial production (IIP) fell an annual 0.1% in November compared to a growth of 6% in the same year-ago month. The CSO revised upwards the October data to show growth of 8.3% from the previously reported 8.2%. Between April and November, industrial growth stood at 1% compared to 3.8% in the same year-earlier period.
Factory data has remained volatile for the past few years, prompting calls for a revamp in the collection and analysis of the key indicator. Economists have said that sharp volatility in the data makes it difficult to determine a trend. But policymakers and economists said the data showed that the worst was over for factory output for now.
The data showed the manufacturing sector rose a paltry 0.3% in November compared with 6.6% expansion in the year ago period while mining fell 5.5% compared to a decline of 3.5%. The capital goods sector, which is a key indicator of industrial activity, fell 7.7% compared to a fall of 4.7% in the year-earlier period. Economists attributed the decline in November to the holiday shutdown of factories due to Diwali and other holidays.
Indian Inc stepped up calls for cutting interest rates and stepping up the reforms pace.
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