Gloomy factory output adds to Indian economic woes
India's industrial output rose just 0.1 per cent in April, according to the data released Tuesday, adding to concerns about the already sluggish economy while raising expectation of an interest rate cut by the central bank next week.
Factory output rose by 0.1 per cent from a year earlier. This is much less than projected growth of 1.7 per cent.
Indian Finance Minister Pranab Mukherjee said the output has let him down. "Frankly speaking I am disappointed and industry has not yet picked up.
"The negative sentiments for investment which is continuing for some time are still there," he told reporters after a meeting with leading industrialists
The manufacturing sector constitutes over 75 per cent of the index. In April 2011, it grew 5.7 per cent.
The gloomy data, adding to the concerns about the once booming Indian economy, came a day after ratings agency Standard Poor's warned that India may lose its investment grade status.
Analysts predicted that the figures may prompt the Reserve Bank of India to introduce fresh measures to boost growth when it holds a policy meeting next Monday.
The bank is expected to cut interest rates again, having raised them 13 times between March 2010 and October 2011.
"The data clearly points to industrial growth being extremely weak, and it is in clear need of monetary as well as fiscal support. There is a case for a sharp move from the Reserve Bank of India," Abheek Barua, chief economist at HDFC Bank, told BBC.
Source: Delhi News.Net
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