The Hindu : Business : Industrial growth dips to 3.8 % in May

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Industrial growth dips to 3.8 % in May

Special Correspondent

NEW DELHI: The rising interest rate regime continued to have its negative impact on the industry as the industrial growth plummeted to 3.8 per cent in May from 10.6 per cent a year-ago as both manufacturing and electricity generation decelerated. Both soaring inflation and the decline in industrial growth led to a fall in the stock market as it reacted sharply to the weak set of index of industrial production (IIP) data. Industrial output rose 3.8 per cent in May from a year earlier, sharply below the previous month’s downwardly revised 6.2 per cent, data showed on Friday. The figure was well below the forecast for growth of 7.2 per cent. This is the second month in a row that the industry performed poorly with industrial growth, as reflected by the IIP, dipping to 5 per cent in April-May from 10.9 per cent a year-ago.

While manufacturing grew by a modest 3.9 per cent in May against 11.3 per cent a year-ago, consumer durables came out from the negative growth to show 4.4 per cent rise against a fall of 0.7 per cent in May 2007. Electricity generation, a key resource for the economy, plunged to 2 per cent from 9.4 per cent. However, mining output showed an upward trend, growing by 5.2 per cent during the month against 3.8 per cent a year-ago. With inflation continuing to scale a new 13-year high and industry showing slackness, the Reserve Bank of India (RBI) is faced with a dilemma of boosting growth or checking inflation.

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