That the green-shoots in the economy that the government claiming for a quite some time has wilted even before they sprouted, is clear from the factory output data for April, which logged in a disappointing 2 percent, which further confirms that much more has to be done to pull the economy out of the deep morass.The final readings have led to shrill calls for interest rate cut by the Reserve Bank and speedy clearances of projects worth tens of trillions of rupees, to boost investment and revive sentiment.
The final reading of the index of industrial production (IIP) for April, the first month of the new fiscal, has moderated from 3.4 per cent in March on account of dismal
performance of manufacturing and mining sectors, although it is better compared to a contraction of 1.3 per cent in the same month last fiscal. The decline in factory output has mainly been on account of dismal performance of key sectors like manufacturing, mining, power and capital goods sectors. Manufacturing sector, which constitutes over 75 per cent of the index, grew by a meagre 2.8 per cent in April. In the year-ago period, however, it had declined by 1.8 per cent. Power generation grew by just 0.7 per cent in April this year compared to a growth of 4.6 percent in same month last year. The mining sector output contracted by 3 percent against a decline in the production by 2.8 percent in April 2012.
Capital goods output saw a growth of just 1 percent, compared to a decline in production by 21.5 per cent in the year-ago period. Meanwhile, decline in wholesale and retail inflation has raised the hope of rate cut by the central bank which is scheduled to announce mid-quarter monetary policy review on June 17.
