Growth in industrial production remained negative for the third month in a row, contracting 0.6 per cent in December 2013, mainly due to the sluggish performance of the manufacturing sector.
Though the factory output data continued to be a worry for policymakers, the December numbers were better than the revised November level of (-) 1.3 per cent.
An earlier provisional estimate had showed a 2.1 per cent contraction in factory output for November last year.
The good news, however, came from the retail inflation numbers for January 2014, which eased to a two-year low of 8.79 per cent as against 9.87 per cent in the previous month.
The sharp sequential drop in consumer price index-based inflation was largely due to softening in vegetable prices, and a marginal decline in oil & fats and sugar prices.
There was moderation in retail inflation in rural areas as well as urban areas for the month under review.
Despite the softening in retail inflation in January, the RBI is unlikely to cut policy rates in its next review meet on April 1, say economy watchers.
While retail inflation for urban areas declined to 8.09 per cent (9.11 per cent), it came down for rural areas to 9.43 per cent (10.49 per cent).
Weakness abound
The mining sector saw some improvement. While output grew 0.4 per cent (-3.1 per cent in December 2012), manufacturing shrank 1.6 per cent (-0.8 per cent in December 2012)
Both capital goods and consumer goods output contracted 3 per cent and 5.3 per cent, respectively. Consumer durables saw a sharp decline of 16.2 per cent in December 2013.
Industry view
Commenting on the disappointing IIP data, Chandrajit Banerjee, CII Director-General, said the chamber was concerned about the performance of the manufacturing sector.
Industry body Assocham said the significant fall in the production of consumer durables indicated that the high interest rates have been affecting growth through demand contraction.
All Government ministries must act in a coordinated fashion to help revive industrial production, the chamber has said.