April factory output growth disappoints at mere 2%

India's industrial production grew at a mere at 2 per cent in April from a year earlier, government data released on Wednesday showed.

A Reuters poll of 25 economists had projected a growth of 2.4 per cent during the month.

Manufacturing, which constitutes about 76 per cent of industrial production, grew 2.8 per cent from a year earlier, the statistics office said.

Capital goods production, a barometer for investments in the economy, grew an annual 1 per cent from a year earlier.

The dismal data puts further pressure on the Reserve Bank of India to ease its monetary policy in its mid-quarterly review next week.

Meanwhile the Index of Industrial Production for March has been revised sharply higher to 3.4 per cent.

Consumer Price Index inflation during May came in higher than expected at 9.31 per cent against 8.9 per cent estimated by a CNBC-TV18 poll. Indranil Pan of Kotak Bank told CNBC-TV18 that both the figures are worrying and will exacerbate the RBI policy dilemma.

Given the volatility in currency, the RBI needs to maintain a linear momentum in its policy rates, he said.

The Sensex slipped around 100 points as both the IIP and CPI data have disappointed. Mining output declined 3 per cent, while the manufacturing and electricity sectors grew 2.8 per cent and 0.7 per cent.

Only 13 out of the 22 industry groups in the manufacturing sector have shown positive on-year growth during the month.

Consumer durables declined 8.3 per cent and consumer non-durables grew 12.3 per cent. The overall growth in consumer goods was 2.8%. Following the release of the, the rupee sunk to a new low of 58.33 to a US dollar.