New Delhi: Industrial growth slowed to 2.7 percent in August due to poor show by the manufacturing sector and contracti per centon in capital goods output, which may prompt the Reserve Bank (RBI) to cut key interest rates in its second quarter policy review later this month.

Industrial output in the April-August period this fiscal was 0.4 percent, down from 5.6 percent in the same period in 2011-12, according to the official data released on Friday.

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 percent 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.

In all, 13 of the 22 industry groups in the manufacturing sector showed positive growth in August.

Consumer durables production growth slowed to 4 percent in August, compared to 5 percent in the same month last year. The output of these goods registered a growth of 5.7 percent during April-August, as against 4.5 percent in the same period in 2011-12.

The consumer non-durables output growth improved to 5.8 percent in August, as against a contraction of 0.7 percent in the same month last year. This segment grew by 1.6 percent in first five months of this fiscal, as against 4.3 percent in the same period of 2011-12.

The basic goods production growth slowed to 2.8 percent in August, as against 5.8 percent a year ago. During April-August period, this segment recorded a growth of 2.8 percent compared to 7.6 percent in the five months of last fiscal

Power generation witnessed a dip in growth rate as it declined to 1.9 percent during August, compared to 9.5 percent in the same month a year ago.

Electricity generation increased by 4.8 percent in the April-August period of this fiscal, as against 9.5 percent in the same period in 2011-12.

The Reserve Bank will come out with second quarter monetary policy review on October 30. The central bank has been holding key interest rates for some time in view of sticky inflationary pressures.

(Agencies)

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