IIP contracts 0.1% in Nov, may prompt RBI to cut interest rate

The decline in the Index of Industrial Production (IIP), which comes after an 8.3 per cent jump in industrial production in October, is being attributed to statistical and seasonal factors by experts.

Chairman of Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan expressed the hope that RBI would take into account various factors including falling IIP numbers before taking a call on interest rate cut in the third quarter policy due on January 29.

The industrial output had grown by 6 per cent in November, 2011. The current fiscal, however, has not been good and a similar decline of 0.1 per cent was seen in July, as per the data released here today.

Factory output growth in April-November period of 2012-13 worked out to be 1 per cent, down from 3.8 per cent in the same period in 2011-12.

Attributing IIP decline to statistical reasons, Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the growth has bottomed out and steps taken by the government to improve investor sentiment would yield fruits in coming months.

Industry chambers, however, stepped up their demand for interest rate cut by RBI, saying that it would improve industrial output by boosting consumer demand.

Meanwhile, the growth in the industrial production during October last year was revised upward to 8.3 per cent, from earlier provisional estimates of 8.2 per cent released last month -- highest in previous 16 month. MORE