Ahead of the RBI monetary policy review, the crucial eight-industry sector data has portrayed a positive picture on the growth front for June after subdued index of industrial production (IIP) numbers in May.
Core sector growth rose to a seven-month high of 6.7 per cent in June due to double-digit expansion in coal, cement and refinery products. On the other hand, crude oil and natural gas continued to contract.
The headline figure may give a boost to IIP growth, which fell to a seven-month low of 3.2 per cent in May. Core sector has 40 per cent weightage in IIP. Principal economist Aditi Nayar said this, along with automobile production and non-oil merchandise exports, may lead to IIP rising to about six per cent in June. “IIP for May could also be revised up since core sector growth was changed to 4.3 per cent from provisional estimates of 3.6 per cent. This weakens the case for Reserve Bank of India to go for a pause in its monetary review," says Nayar.