The weakness in capex cycle is evident in the number of new investment announcements falling to a 12-year low in the first quarter of this year, according to the RBI.

Lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector also helped highlight this predicament.

The RBI noted that industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing.

Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity. For electricity generation, deficiency of demand seems to remain a binding constraint.

In terms of use, the output of consumer non-durables accelerated and underlined the resilience of rural demand.

But it was overwhelmed by the contraction in consumer durables – indicative of still sluggish urban demand – and in capital goods, which points to continuing retrenchment of capital formation in the economy.

The output of core industries was also dragged down by contraction in electricity, coal and fertiliser production in June, owing to excess inventory and tepid demand.

On the positive side, natural gas recorded an uptick in production after a prolonged decline and steel output remained strong.

The 78th round of the RBI's industrial outlook survey revealed a waning of optimism in Q2 about demand conditions across parameters, and especially on capacity utilisation, profit margins and employment.

The manufacturing purchasing managers’ index (PMI) moderated sequentially to a four-month low in June and the future output index also eased marginally.

In July, the PMI declined into the contraction zone with a decrease in new orders and deterioration in business conditions, reflecting inter alia the roll-out of the GST.

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