New Delhi, Aug 9: Amid weak global sentiment and declining demand on domestic front, India's industrial growth continued to trend southward in 2012, as after registering 2.5% on-year growth in May, country's industrial growth once again moved to negative to -1.8% on-year in June mainly due to high base effect.
The index of industrial production (IIP) data released by the Ministry of Statistics & Programme Implementation showed Thursday that cumulative growth for the period April-June 2012-13 stands at -0.1% over the corresponding period of the previous year.
The Central Statistics Office (CSO), under the Ministry of Statistics and Programme Implementation, data showed manufacturing sector, which constitutes nearly 76% of industrial output, contracted -3.2% on-year in June. Electricity sector registered a growth of 8.8% in June over same month last fiscal. The mining sector grew marginally by 0.6% in the month after negative growth of -0.9% in May.
In the fiscal FY13 so far, manufacturing sector contracted -o.7% as compared to April-June period of FY12. Electricity sector grew by 6.4% and mining sector contracted by -1.1% in the period.
Based on use-based classification, basic goods registered 4.1% on-year growth in June, Capital goods contracted -27.9% mainly because of high base effect and intermediate goods recorded a growth of 1.6% on-year in June.
The Consumer durables and Consumer non-durables have recorded growth of 9.1% and negative 1% respectively, with the overall growth in consumer goods being 3.5%.
The global factors along with domestic factors are hurting India's growth story as after clocking above 8% GDP growth in last 8-years the country has been projected to record lower than 6% GDP growth rate this fiscal, with higher fiscal deficit and current account deficit.
June IIP data, although on expected line, seems not to have any effect of stock movement as Sensex on BSE moved up 0.19% to 17,634.74 at 11:10 am.
As the industrial growth is heading south and Inflation is also showing of surge again, it would be very challenging for the central bank to cut policy rate to ease liquidity pressure.
As the central bank, RBI, is still on inflation control mode it is expected the with projection of weaker monsoon there will not be much from the central bank and government, which does not have much room due to fiscal pressures.
Reserve Bank of India (RBI) left the key policy interest rate unchanged in its latest policy review, however in a token gesture, RBI cut statutory liquidity ratio (SLR) by 100 basis points to 23% from 24%.
As India's growth slowed to a nine-year low of 5.3% Q1, the central bank cut its economic growth outlook for the FY13 to 6.5%, from the 7.3% projected earlier.
As RBI has raised its headline inflation projection for FY13 to 7% from 6.5% made in last review.