Industrial output growth slowed in May on the back of sluggish manufacturing sector expansion, triggering demand for a cut in interest rates to support growth.
The index of industrial production (IIP) rose 2.7% in May compared to a downwardly revised 3.4% growth in April and 5.6% expansion in the year-ago period. In April, provisional data had shown the sector had grown 4.1%, fuelling talk of a sharp turnaround.
The manufacturing sector, which accounts for over 75% of the index, grew 2.2% in May compared to an expansion of 5.9% in the year-ago period.Mining and electricity sectors notched up healthy growth.
The consumer goods sector remained a worry . The consumer durables segment contracted 3.9% in May compared , to an expansion of 3.6% in May 2014. Consumer goods fell 1.6% year-on-year in May compared to growth of 4.6% in May 2014.. The prospect of a below-normal monsoon is expected to dent demand in the sector, which is crucial for overall growth. While industrial output data has remained volatile, some economists urged caution and said terming the May data as a sharp slowdown may be an over-reaction.
But, India Inc said the sector was on the path of recovery .
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