Factory output near flat,rate cut hope rises

Banks were among the leading gainers. Financial Services Secretary D K Mittal said state-run banks would welcome a 1 percentage point cut in CRR. The slowdown in industrial production will surely weigh on the central bank at its mid-quarterly review on June 18.

In response to the IIP data,industry made a renewed pitch for “bolder reforms”. The April data is marginally better than the estimates that came in for March,when output contracted by 3.5 per cent on an annual basis.

But the big bother in the April data is the fact that as many as 10 of 22 industry segments,including capital goods and mining,posted negative growth. Output in the capital goods sector — widely seen as the barometer of investment activity in the broader economy — declined by well over 16 per cent in April as against a growth of 6.6 per cent in the same month last year,clearly showing that entrepreneurs are losing appetite for fresh investments. Mining output contracted by 3.1 per cent in April,against a growth of 1.6 per cent in the same month a year ago.

“I am disappointed. Industry has not yet picked up. Negative sentiments are there. We have to take steps to give positive signals,” Finance Minister Pranab Mukherjee said.

FICCI president R V Kanoria said,“The April IIP figures of 0.1 per cent reconfirms our view that Indian industry is in crisis and business sentiment is indeed very low. The government needs to take bolder decisions and at a much faster pace to push forward reforms.”