New Delhi: Dragged down by negative growth in capital goods and smaller increase in mining, India’s industrial output growth slowed to a five-month low of 4.4 percent in March.
It had grown by over 7 per cent plus average, in the previous four months.
However, despite a low growth RBI is not expected to cut interest rates in the next policy review meeting due to concerns over inflation.
The industrial growth measured by the Index of Industrial Production (IIP) for 2017-18 too decelerated to 4.3 per cent from 4.6 per cent in the previous fiscal. The IIP had grown by 4.4 per cent in March 2017.
Manufacturing sector, which constitutes over 77 per cent of the index, grew at 4.4 per cent in March as compared to 3.3 per cent in the same month in the previous fiscal.
In terms of industries, 11 out of the 23 industry groups in the manufacturing sector showed positive growth in March 2018 as compared to the corresponding month of the past year.
Overall manufacturing grew 4.5 percent last fiscal year, up from 4.4 percent a year ago, as big companies adjust following teething troubles with GST.
The output of mining sector decelerated to 2.8 per cent during in March as compared to 10.1 per cent in the same month in 2017. Similarly, power generation too slowed down to 5.9 per cent as against 6.2 per cent in March 2017. Capital goods output, however, declined by 1.8 per cent during March as compared to a growth of 9.4 per cent in the corresponding period last year.
On the other hand, consumer durables output showed an increase of 2.9 per cent as against decline of 0.6 per cent in March 2017. The consumer non-durables segment showed an impressive growth of 10.9 per cent in March as against 7.5 per cent in corresponding month last year. “The IIP data for March throws a disconcerting fact about lack of appetite for investment, amplified by negative growth in the capital goods. The over-hang of high leverage in the industry as also squeezed balance sheets of the banks are visible from the IIP data,” said Assocham.