Industrial production in the country declined by 0.8 per cent in April against 0.3 per cent growth in March, raising questions over India becoming the growth engine of the world.
The negative growth in Industrial production also pose a challenge to the government and the RBI, which is concerned with both growth and price rise.
RBI, however, has made it clear that it is unlikely to lower rates any soon as CPI inflation is hovering at 5.4 per cent and banks have not passed on the benefits of earlier rate cuts to the consumer.
Quick estimates released by Central Statics Office (CSO) show the index of industrial production (IIP) fell 0.8 per cent in April 2016 from 3 per cent growth a year ago as manufacturing output fell 3.1 per cent.
Cumulative growth of industrial production for the period April-March 2015-16 over the corresponding period of the previous year stands at 2.4 per cent.
While manufacturing output fell 3.1 per cent, mine production grew 1.4 per cent and electricity generation was up 14.6 per cent.
The three sectors recorded cumulative growth rates of 2.2 per cent, 2.0 per cent and 5.7 per cent, respectively, during April-March 2015-16 over the corresponding period of 2014-15.
Nine out of the 22 industry groups in the manufacturing sector have shown negative growth during April 2016 compared to the corresponding month of the previous year. The industry group 'electrical machinery and apparatus' has shown the highest negative growth of (-) 55.9 per cent, followed by 'food products and beverages' (-) 24.5 percent and 'tobacco products' (-) 17.6 per cent.
On the other hand, the industry group 'furniture; manufacturing' has shown the highest positive growth of 28.0 per cent, followed by 'radio, TV and communication equipment and apparatus' 18.8 per cent and 'office, accounting and computing machinery' 18.7 per cent.
Basic goods production increased by 4.8 per cent, while capital goods output fell 24.9 per cent in and intermediate goods production rose 3.7 per cent in April 2016. The consumer durables and consumer non-durables sector have recorded growth rates of 11.8 per cent and (-) 9.7 per cent, respectively, with the overall growth in consumer goods being (-) 1.2 per cent.
During FY16, the infrastructure sector grew just 2.7 per cent as compared with 4.5 per cent in FY15, 4.2 per cent in FY14 and 6.5 per cent in FY13.
Infrastructure is perceived as one of the engine of growth along with the manufacturing. While the government has been luring domestic and foreign firms to step up investment under the "Make in India" initiative, infra development has remained sluggish.
India's FY16 GDP growth accelerated to 7.6 per cent after printing at 7.2 per cent in FY15 following a raft of fiscal and monetary steps. With industrial production falling, it remains to be seen whether the rate of growth is really attainable.