The August IIP data arrived at a weaker 4.1% from year-ago levels led by poor slowdown in manufacturing activity and decline in mining output. The July IIP number had come in at a dismal 3.3%on account of slowing growth and consumer demand. However, the July industrial output figures were revised to 3.84%.

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Moreover, industry experts had factored industrial output growth to come in marginally higher at 5%, for the month of August. In final analysis, it was the manufacturing sector output that disappointed with a subdued 4.5% growth in August, with the sector comprising almost three-quarters of IIP index.

Even Mining output logged in a decline by 3.4% for the given month, followed by slower growth in capital goods index to 3.9% and production of intermediate goods to 1.3% during August 2011.

Rating agency Moody’s has attributed the weak IIP data to RBI’s rate tightening spree weighing on the domestic demand amid steadily decelerating India’s industrial sector, underscoring the downside risks for the Indian economy.

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