India’s industrial output fell in September compared to that in the same month last year, indicating that the weak global demand is continuing to have its impact on the country’s economy.
According to the data released Monday by the Ministry of Statistics and Program Implementation, India’s industrial production, which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities, declined 0.4 percent in September compared to that in the same month last year, down from a 2.3 percent rise in August and also below the analysts’ expectation of a 2.8 percent increase.
This report comes after earlier this month it was reported by HSBC and Markit that India’s Purchasing Managers’ Index rose moderately in October to 52.9, up from 52.8 in September.
Last month, the Reserve Bank of India (RBI) kept its key policy rate unchanged in spite of the government pressure on it to cut. The RBI left its key repo rate unchanged at 8.0 percent but cut the cash reserve ratio from 4.5 percent to 4.25 percent.
With inflation likely to remain high, investors worry that the central bank will continue to disappoint those hoping that significant monetary policy loosening will give a boost to the economy. According to the data released earlier this month by the Ministry of Statistics and Program Implementation, India’s Consumer Price Index slightly eased to 9.73 percent in September, down from 10.03 percent in August.
India’s economy is visibly under pressure with reports coming that the government might borrow an extra 250 billion rupees ($4.6 billion) in the second half of the fiscal year 2013 by selling the government securities or treasury bills. Earlier this month, Finance Minister P Chidambaram said that this year’s growth in India would be only in the 5.5-6.0 percent range.