India's Industrial Production Contracts in November on Weak Mining and Manufacturing Data

India's industrial output has edged down in November, as the mining and manufacturing sectors slowed down primarily due to extended holidays during the month.

The general index of industrial production (IIP) declined 0.1 percent to a reading of 167.3 from the revised level in November 2011, according to the Central Statistical Organisation. The decrease compares to a revised 8.3 percent gain recorded in October.

Economists surveyed by Bloomberg expected a gain of 0.1 percent on average.

Production is expected to have hit due to the Diwali festival celebrated in November, which caused factories shutting for a day or two.

Over the period from April to November of fiscal year 2012/13, the industrial sector experienced a year-over-year growth of 1.0 percent.

The sub-index for the mining declined 5.5 percent in the month from the corresponding period, a year ago. The indices for manufacturing, which constitutes about 76 percent of industrial production, and electricity sectors rose 0.3 percent and 2.4 percent, respectively.

In the manufacturing sector, 13 out of the 23 industry groups reported negative growth during November. Publishing, printing and reproduction of recorded media group recorded the highest negative growth of 22.1 percent, followed by 21.8 percent in office, accounting and computing machinery and 18.9 percent in wood and products of wood and cork except furniture.

The country's industrial production has slowed down in most of 2012 due to high inflation rates, declined investment and lower exports.

The latest data is expected to prompt the Reserve Bank of India (RBI) to cut prime interest rates to boost economic growth, which has reportedly slowed down to the lowest in a decade to 4.9 percent in 2012. The RBI is likely to announce rate cuts on 29 January.

Meanwhile, Finance Minister Palaniappan Chidambaram, who is due to deliver the budget in February, has vowed to keep restraints on fiscal policies in a move to spur investor confidence.