India's industrial growth sharply slowed to 5.3 percent in November, pulled down by a contraction in the consumer goods sector, according to government data released on Friday.

Slower growth of exports, which have been hit by a stronger rupee, also appeared to have contributed to the slowdown.

The Index of Industrial Production rose 5.3 percent in November from a year ago, according to provisional data from the Central Statistical Organization. That was lower than a 12 percent expansion in the preceding month and 15.8 percent growth in the same month a year ago.

Some economists said the data could be misleading because several festival days fell during November and there could be some delay on the part of companies in reporting production data.

November industrial output was weakened by a 2.6 percent year-on-year contraction in the consumer goods sector, which had grown 13.5 percent in the same month of the previous year.

It "reflects a pause in production of items like televisions and microwaves, just after (the Hindu festival of) Diwali, since most of the purchases would have happened in the previous month," said Manoranjan Sharma, chief economist at Canara Bank.

Most economists expect industrial output growth to remain modest in the coming months due to higher lending rates and the strength of the rupee, which has gained around 12 percent against the U.S. dollar in the past year and is hurting exporters.

In the April-November period, industrial growth averaged 9.2 percent, compared to 10.9 percent in the same period a year ago. India's fiscal year runs from April through March.

"Industry output is not likely to grow in double digits like last year," said D. K. Joshi, principal economist at credit rating firm CRISIL.

Others said the slowdown could prompt authorities to soften monetary policy.

Deepak Parekh, chairman of Housing Development Finance Corp. Ltd., said Friday that Indian banks may cut interest rates by 25 basis points by the April-June quarter if the central bank doesn't hike the cash reserve ratio.

"We may see a little softening in interest rates ... as to when will this happen, banks will be waiting for the Reserve Bank's policy meeting," he said.

Mr. Rakesh Joshi

Joshi Enterprise

Manager, Joshi Enterprise
Dispur, India

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