Factory output grew less-than-expected 0.1 per cent in July, weighed down by the contraction of 0.2 per cent in manufacturing.

The Index of Industrial Production (IIP) growth in July compares better than the 1.8 per cent contraction seen in June.

Capital goods continues to be an area of concern, with output in the segment contracting by five per cent for the month under review.

RBI monetary policy

This modest uptick in IIP for July would imply that the Reserve Bank of India (RBI) would leave policy rates unchanged on September 17, said economy watchers.

Indications are that the central bank would look at some cut in policy rates only in the October mid-year policy review meeting.

Capital goods output has grown only once in the last 11 months for which data is available now.

Core sector growth

The July IIP was weighed down by tepid growth in eight infrastructure industries, which account for almost 40 per cent of factory output.

The eight key infrastructure industries expanded just 1.8 per cent in July, the slowest pace since January this year.

>srivats.kr@thehindu.co.in

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