New Delhi, July 12: Amid weak global sentiment and declining demand on domestic front, India's industrial growth continued trend southward in 2012, as after registering negative 0.9 on-year growth in April, country's industrial growth showed some sign of resurgence in May and grew 2.4% over the same period last year.
The index of industrial production (IIP) data released by the Ministry of Statistics & Programme Implementation showed Thursday that cumulative growth for the period April-May 2012-13 stands at 0.8% 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, grew 2.5% on-year in May. Electricity sector registered a growth of 5.9% over same month last fiscal. The mining sector contracted by -0.9% in May.
In the fiscal FY13 so far, manufacturing sector grew 0.6% as compared to April-May period of FY12. Electricity sector grew by 5.2% and mining sector contracted by -2% in the period.
Based on use-based classification, basic goods registered 4.1% on-year growth in May, Capital goods recorded a negative growth of 7.7% on-year and intermediate goods recorded a growth of to 2.4% on-year in May.
The Consumer durables and Consumer non-durables have recorded growth of 9.3% and 0.1% respectively, with the overall growth in consumer goods being 4.3%.
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.
March IIP data is bit shock for the market as BSE Sensex dropped 1.17% at 12 p.m. and trading at 17,283.
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. However, with improvements in Eurozone it is expected that fresh demands will boost production in emerging economies like India.