MUMBAI: India's industrial output dipped marginally by 0.1 percent in November from a year ago, data showed yesterday, raising hopes that the central bank will soon cut interest rates to boost sluggish growth.
The figure matched market expectations but was well below the previous month's 8.3 percent growth figure and underlines the challenges the government faces as it seeks to kickstart the economy.
Manufacturing output, which accounts for three-quarters of the index of industrial production, rose just 0.3 percent, while capital goods — such as factory plant equipment — plunged by 7.7 percent, the data showed.
"The numbers were not a surprise," said Siddhartha Sanyal, chief India economist with Barclays Capital, who expects India's industrial output to grow in low single digits until March.
The once-booming South Asian economy has been hit by continuing high interest rates in the face of strong inflation, sluggish exports and slow investment.
India last month cut its growth forecast for the current fiscal year ending March to between 5.7 and 5.9 percent, putting it on track for its worst annual performance in a decade.
Prime Minister Manmohan Singh, who with general elections due in 2014 is keen to revive the economy, announced a string of reforms in September, opening up retail and other sectors to wider foreign investment.
The government has also vowed to clamp down on tax evasion to help to lower the country's wide fiscal deficit.
India's output dip comes as industrial output in fellow Asian giant China has been growing much faster, rising 10.1 percent in November from a year earlier.