New Delhi: India’s factory output grew 2.7% in August with manufacturing showing signs of revival, though capital goods, a key indicator of revival of investment demand, continued to contract. While manufacturing grew 2.9%, mining was up 2% and electricity 1.9%. Capital goods, however, contracted by 1.7%.
The government is hoping that the central bank will respond positively to a number of reform measures taken over the recent weeks and cut key interest rates later this month to promote growth.
In its mid-quarter review of the monetary policy last month, the Reserve Bank of India (RBI) did not lower the repo rate, but reduced the cash reserve ratio by 25 basis points. One basis point is 0.01%
In July, the Index of Industrial Production (IIP) was flat, registering growth of only 0.1%, mainly due to the slump in manufacturing and mining.
In the first five months of the fiscal year (April-August), IIP growth was flat at 0.4%.