Industrial growth slowed to 3.6 per cent in February, 2011, compared to 15.1 per cent expansion in the year-ago period, dragged down by poor performance of manufacturing and mining sectors.
However, overall 15 out of 17 industry groups achieved positive growth in the second month of 2011.
This was because of slippages in performance of capital goods and basic goods sector, though consumer goods sector continued to post good results.
The deceleration in IIP, according to Planning Commission Deputy Chairman Montek Singh Ahluwalia, will not impact the gross domestic product growth rate, estimated at 8.6 per cent during 2010-11, as the shortfall will be made up by robust farm sector growth.
Further interest rate increases later this year remain likely.
Despite subdued industrial production results, hawkish rhetoric from senior RBI representatives in the past month suggests the next interest rate increase could come as early as 3 May.
Despite subdued industrial production results, hawkish rhetoric from senior RBI representatives in the past month suggests the next interest rate increase could come as early as 3 May.
The Reserve bank has already hiked policy rates eight times since March 2010 to tame inflationary pressure.
The overall inflation in February was 8.31 per cent.
It has remained above the 8 per cent mark since February 2010 and renewed concerns have been expressed over rising crude prices on account of the conflict in Libya.
Meanwhile, the IIP for January 2011, has been revised upwards to 3.95 per cent, from 3.7 per cent. During April-February period of current fiscal, industrial growth slowed to 7.8 per cent, from 10 per cent in the same period of the previous financial year.
The slower growth is due to a combination of factors -- higher base and slowing of investments.
Higher input costs as well as tightening interest rates are expected to moderate the industrial growth going forward.
Factory output was low in February as capital goods contracted by 18.4 per cent.
The sector had expanded by a robust growth of 46.7 per cent in February, 2010. In February, manufacturing growth plummeted to 3.5 per cent from 16.1 per cent during the same period a year ago.
However, production in the consumer non-durables segment went up by 6.1 per cent during the month under review.
However, production in the consumer non-durables segment went up by 6.1 per cent during the month under review.
It had contracted by 0.8 per cent in the same period of 2010. Consumer durables segment grew by 23.4 per cent in February as against 29.1 per cent in the same month of last year.
Overall consumer goods reported a rise of 11.1 per cent as against 6.3 per cent in February last year.
Intermediate goods reported a rise of 8.4 per cent during the month as against a growth of 15.9 per cent in February 2010.
Intermediate goods reported a rise of 8.4 per cent during the month as against a growth of 15.9 per cent in February 2010.
Mining growth also plummeted to 0.6 per cent in the month under review from 11 per cent in the comparable month of 2010.
Electricity generation output rose by 6.7 per cent in February, compared to 7.3 per cent growth in the same month last year.
The economy has expanded at more than 8 percent in the last three quarters, riding on strong manufacturing that contributes about 80 percent of the industrial output.
India's exports jumped an annual 49.7 percent in February to $23.6 billion, while imports rose 21.2 percent to $31.7 billion, latest government data showed.
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