New Delhi: Manufacturing sector growth figures have singlehandedly improved country’s Index of Industrial Production (IIP). IIP rebounds to 6.8 percent in January. But downfall is still continuing in mining, capital goods and consumer durable sectors.     

IIP registered a growth of meager 2.5 percent in December 2011.

With 8.5 percent growth in manufacturing sector in January 2012, it has improved country’s IIP to a seven-month high.

Manufacturing sector alone contributes 75 percent to the IIP. Whereas output from mineral and capital goods sector has declined by 1.5 and 2.7 percent respectively as compared to the same month last year.

While commenting on IIP numbers Finance Minister Pranab Mukherjee has said “there has been significant improvement in IIP from December.”

In January last year IIP growth was registered at 7.5 percent. Earlier in June 2011, IIP growth rate clocked 9.5 percent. From April-January 2010-11, 4 percent growth was registered in IIP. Whereas in the same period a year before, IIP growth rate pegged at 8.3 percent. 

IIP growth rate has been hit significantly by high inflation and high interest rates in last few months.

Though interest rate cut has not yet be started but RBI has slashed CCR twice in recent times to increase inflow of cash into the banking system.

As a result, now the banks have more cash available for lending. RBI will be doing mid-term review of monetary policy on March 15. 

It is believed that series of interest rate cut may be initiated during the review.