Industrial growth slows to 4.1% in Feb

Showing persistent sluggishness in the economy, industrial production growth slowed to 4.1 per cent in February this year, mainly due to poor performance of manufacturing sector and consumer goods segment.

Growth in factory output, as measured by the Index of Industrial Production, was higher at 6.7 per cent in February 2011.

Besides, the IIP growth has been revised downwards to 1.14 per cent in January, from the provisional estimates of 6.8 per cent, according to the official data released on Thursday.

Output of the manufacturing sector, which constitutes over 75 per cent of the index, rose by just 4 per cent in February, compared to 7.5 per cent in February 2011.

Consumer goods output has also shown a slowdown as the production declined by 0.2 per cent per cent in February, as compared to 13.4 per cent in the same month last year.

Besides, the consumer durables segment output contracted 6.7 per cent in February, as against robust 18.2 per cent growth in the same month last year.

However, the capital goods sector witnessed a growth of 10.6 per cent, as against a contraction of 5.7 per cent in the same month last year.

Mining output too has shown some improvement at 2.1 per cent in February, as against 1.2 per cent growth in the year-ago month.

Power generation witnessed a growth of 8 per cent in February, compared to 6.8 per cent in the year-ago

period.

During the month, 18 out of 22 industry groups witnessed positive growth in February.

Output of basic goods went up by 7.5 per cent, as against 5.5 per cent.

However, intermediate goods witnessed a contraction of 0.6 per cent, as against 6.3 per cent growth in February last year.

During the April-February period of 2011-12, the IIP growth is 3.5 per cent, as against 8.1 per cent in same period in 2010-11.

The overall slow growth of IIP at 3.5 per cent during the April-February period, may prompt the Reserve Bank to cut short term lending and borrowing rates in its annual monetary policy to be unveiled on next week.

Industry has been blaming the slowdown in growth to the high interest rate regime that has made borrowings costly and curbed consumer spending.

Prime Minister's economic advisory panel chief C Rangarajan had said that the policy rate cuts by RBI would depend on inflation movement.

According to the latest data available, the overall inflation is still high at 6.95 per cent in the month of February.

The apex bank in a surprise move had slashed cash reserve ratio from 5.5 per cent to 4.75 per cent last month to infuse Rs 48,000 crore (Rs 480 billion) to ease the liquidity crunch in the financial system.