New Delhi: Industrial growth slowed to 2.7 percent in August due to poor show by the manufacturing sector and contraction in capital goods output, which may prompt the Reserve Bank to cut key interest rates in its second quarter policy review later this month.
Growth in overall factory output, as measured by the Index of Industrial Production (IIP), was 3.4 percent in August last year.
The manufacturing sector, which constitutes over 75 per cent of the index, grew at slow rate of 2.9 percent in August, as against 3.9 percent in the same month last year.
The production growth in the manufacturing sector in April-August was flat, as against 6 percent growth in the same period in 2011-12.
Capital goods output contracted by 1.7 percent in August, as against 4 percent growth in August, 2011.
Output of capital goods contracted in the April-August period by 13.8 percent, as against growth of 7.3 percent in the 2011-12 period.
However, mining output in August grew by 2 percent as against contraction of 5.5 percent in same month last year.
The sector’s production in April-August declined by 0.6 percent, compared to a contraction of 0.5 percent in same period a year ago.
Consumer goods production was up 5 percent in August as compared to a meagre growth of 2.1 percent in same month last year. During the April-August period of this fiscal, the growth in the segment was 3.5 percent, compared to 4.4 percent in the five month period a year ago.