Following weak industrial production data as well as a general slowdown in the economy, the government has urged the central bank of the country, the Reserve Bank of India (RBI) to consider reducing its interest rates during its policy review on July 31.
The country’s India’s index of industrial output (IIP) grew at 2.4 per cent in May 2012 compared to the same period in the previous fiscal year.
The analysts were expecting a growth rate of 1.8 per cent in the month of May. The growth rate of 2.4 per cent in the month of May is much higher than a contraction of 0.9 per cent in April. However, it is much lower than the 9 percent annual growth in industrial output per month that was recorded by the country before economic slowdown.
Planning Commission Deputy Chairman Montek Singh Ahluwalia said on Thursday that the low growth of industrial growth is not acceptable. Commerce and Industry Minister Anand Sharma said that the government will ask the central bank to reduce interest rates in its policy review.
Experts say that the IPP data as well as the June wholesale price inflation will help RBI make a decision on its key lending rates during its review on July 31.