New Delhi: Poor performance of manufacturing and mining sectors pulled down the industrial growth rate to 3.6 per cent in February, but Reserve Bank has no intentions of softening the monetary policy even if inflation is still above the comfort level, say experts. (Agencies)
The factory output, measured in terms of the index of industrial production (IIP), fell to 3.6 per cent in February from 15.1 per cent a year ago.
This was due to slippages in performance of capital goods and basic goods sector, though consumer goods sector continued to post good results.
The deceleration in IIP, according to Planning Commission Deputy Chairman Montek Singh Ahluwalia, will not impact the Gross Domestic Product (GDP) growth rate, estimated at 8.6 per cent during 2010-11, as the shortfall will be made up by robust farm sector growth.
However, he said that the country's growth prospects remain solid though the continuous rate hikes since the past one year will ensure industrial production remains subdued in the first half of 2011.
The inflation has remained above the 8 per cent mark since February 2010 and renewed concerns have been expressed over rising crude prices on account of the conflict in Libya.
Meanwhile, the IIP for January 2011 has been revised upwards to 3.95 per cent, from 3.7 per cent. During the period of April-February of current fiscal, industrial growth slowed to 7.8 per cent, from 10 per cent in the same period of the previous financial year.
Asked whether the below 8 per cent industrial growth would be sufficient to clock 8.5 per cent GDP growth this fiscal, Planning Commission Deputy Chairman Montek Singh Ahluwalia replied, "Yes, it will because I think agriculture growth will be higher than the earlier forecast (of 5.4 per cent)."
Crisil chief economist D K Joshi said that industrial production would remain subdued for another month or two. Joshi said industrial growth may catch the pace by April or May but added that he do not foresee any halt by the Reserve Bank in its monetary tightening policy.
Yes Bank chief economist Shubhada Rao said: "For sustained growth, we need to see stronger traction in investment cycle, adding that low IIP numbers are the result of a high base.
Factory output was low in February as capital goods contracted by 18.4 per cent. The sector had expanded by a robust growth of 46.7 per cent in February, 2010.
New Delhi: Poor performance of manufacturing and mining sectors pulled down the industrial growth rate to 3.6 per cent in February, but Reserve Bank has no intentions of softening the monetary policy even if inflation is still above the comfort level, say experts.