If there was a welcome piece of news in the index of industrial production (IIP) data for February released today, it was the jump in capital goods production.
It was a bright spot in an otherwise weak overall industrial production footprint.
Capital goods output grew 9.5 per cent in February on a year-on-year basis. This was the first increase in four months.
This came on top of the 10.5 per cent growth recorded under this use-based category in same month last year.
But economy watchers were not too excited about this single number.
This is because overall industrial production growth slipped sharply to 0.6 per cent in February 2013 as against the 4.3 per cent growth recorded in February last year. Factory output had recorded 2.4 per cent growth in January.
Contraction in power and a sharp fall in mining output pulled down the overall performance in February.
Planning Commission Deputy Chairman Montek Singh Ahluwalia took heart that IIP was not negative. He also expressed confidence India’s economic growth will be higher in current fiscal.
“Obviously industrial growth is very low. It is due to mining sector. There are problems in mining sector which I hope will get sorted out,” Ahluwalia said.
Retail inflation dips
A moderation in retail inflation for March at 10.39 per cent, snapping a five-month rising trend, coupled with sharp slippage in overall factory output growth raised expectations that RBI will further cut policy rates on May 3 at its policy review meet.
A disappointed India Inc today made a case for further cut in interest rate by the RBI to boost production and revive economic growth.
The benchmark Sensex tanked nearly 299 points to close at 18,242 on Friday on the back of weak IIP numbers and muted growth forecast from IT bellwether Infosys.