Growth in output of eight core sector industries — with combined weight of 38% in the Index of Industrial Production — jumped to 6.3% in October, the highest in four months, as against negative growth of 0.1% in the same month last year, thanks to robust growth in electricity, coal and refinery products. The output of eight core industries had grown just 1.9% in September.
The latest data comes on the heels of second quarter GDP data showing economic expansion of 5.3%, compared with a nine-quarter high of 5.7% in the previous quarter, and the continued weakness of the manufacturing industry.
Most experts still continue to believe the RBI is likely to maintain the policy rate at 8% in Tuesday’s review even as India Inc and the government have been demanding that policy be eased to boost lending, investment and growth.
Core sector data released by the commerce ministry on Monday showed output in coal, electricity and refinery products recorded annual growth rates of 16.2%, 13.2% and 4.2% respectively in October. Coal and refinery products production had shrunk by 3.5% and 5% respectively in October 2013 while power generation grew by just 1.3%.
Expansion in crude oil and steel output was 1% and 2.3% respectively in October. Growth in the sectors was slower than the previous month. In April-October, the eight sectors registered growth of 4.3% as against 4.2% in the same period last year.
As per HSBC, GDP growth is expected to revive gradually, led by investment, and this moderation is expected to be partly offset by a post-monsoon spurt in construction activity.