India's industrial output growth fell in June to 1.8 percent against the analysts' expectation of a 1 percent growth, as compared to the same period a year ago.
While the data for the month of May was revised to 2.5 from 2.4 stated earlier, the cumulative growth in the April-June quarter declined 0.1 percent over the corresponding period of the previous year.
Growth was recorded on mining sector (0.6 percent) and electricity sector (8.8 percent) while the manufacturing sector output declined 3.2 percent compared to the 2.5 percent growth in May, the data released by the Central Statistics Office of the Ministry of Statistics and Program Implementation showed.
Consumer durables recorded a robust growth rate of 9.1 percent while consumer non-durables declined 1 percent.
The basic goods grew 4.1 percent in May. However, the capital goods sector saw a sharp decline of 27.9 percent, reflecting a slowdown in investment in infrastructure.
The industry believes that the contraction in growth may be sufficient enough to prompt the Reserve Bank of India to cut the interest rates.
"The data bodes ill for Q2 (FY Q1) GDP growth which may well remain below 6 per cent year-on-year. It highlights continued softness of the Indian economy amid contracting exports and weaker domestic demand," Dariusz Kowalczyk, an economist with Credit Agricole CIB in Hong Kong, was quoted as saying by NDTV Profit.