Core sector industrial production in the country slowed to three-month low of 2.4 per cent in December last year as production of crude oil, natural gas, fertiliser and steel declined. The eight core sector industries -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity -- had expanded by 4 per cent in December 2013.
The growth was 6.7 per cent in November last year. Negative growth in crude oil, natural gas, fertiliser and steel has led to the dip in the overall growth rate of core industries. The core sector contributes 38 per cent to the overall industrial production, a parameter that RBI takes into account while framing its monetary policy.
As per HSBC Purchasing Managers Index, manufacturing growth also slipped to a three-month low in January on slower pace of order flows from domestic and global markets, raising hopes of a rate cut by the RBI in its policy review.
Bankers believe inflation is under control and macroeconomic indicators are also conducive for a further rate cut of 0.25 per cent, even as some expect the central bank to maintain a status quo. “Notwithstanding the moderation in core sector growth in December and the fiscal cushion created through the stake sale in Coal India ltd, we expect the RBI to pause in the February policy review and resume rate cuts only after the presentation of the Union Budget at the end of this month,” ICRA said in a statement.