Mumbai - AFP
India\'s industrial output growth in April halved compared with the same period last year, a newly-structured index showed Friday, easing pressure on the central bank ahead of an interest rate decision. Finance Minister Pranab Mukherjee said the data was \"disturbing\" but said trends will become apparent only when the new index is analysed over a longer period. Overall production rose 6.3 percent in April after growth of 13.1 percent in the same month last year, the government\'s Central Statistical Office said on its website. The figures are based on a revised index including newer components and weightages to reflect more recent production behaviour. The new base year for industrial output is 2004-05. The old model was based on 1993-94 data. Output in manufacturing, which accounts for 80 percent of the index, rose 6.9 percent in April, down from 14.4 percent growth a year earlier, according to the new index. Shares on the Mumbai stock exchange fell 0.5 percent or 90.3 points to 18,294.5 in reaction to the figures. Most economists expect the Reserve Bank of India (RBI) to raise interest rates by 25 basis points next Thursday but the slowdown in output indicates that monetary policy makers may be less aggressive. \"The RBI will be calibrated in its approach, and less aggressive,\" said Rupa Rege Nitsure, chief economist with state-run Bank of Baroda. Industrial activity in India has slowed even as the central bank is on an aggressive monetary tightening policy, hiking interest rates nine times in 15 months to tame inflation, which is the highest in all major Asian economies. The RBI hiked rates 50 basis points last month, saying short-term economic growth may have to be sacrificed in the fight against inflation, which at 8.66 percent is far above the bank\'s target level of 5 to 6 percent. \"The above growth trend confirms to our view that we have seen the bottom of industrial activity. Private consumption also appears to have moderated,\" said Jay Shankar, chief economist with Religare Capital Markets. Shankar was confident inflation would be controlled soon, which could also indicate peaking of the interest rates cycle. Based on the older model, which is still used by analysts, overall industrial output rose 4.4 percent in April, well below expectations of around five percent. Output for March rose 7.3 percent. \"The new index can be considered a much closer reflection of the present industrial scenario, being formed out of different items as per the recent production behaviour in India,\" the CSO said. The new April data showed that production of capital goods -- like factory goods, machinery and equipment -- grew by less than half to 14.5 percent year-on-year. Growth in the production of consumer durables plunged sharply to 3.8 percent in the new index, from 23.3 percent a year earlier. India grew by 8.5 percent in the full fiscal year to March 2011, an increase from the 7.4 percent of 2009-10. Mukherjee sees inflation easing to near 6.0 percent this fiscal year.