India's industrial production in July fell to a nine-month low of 7.1% compared with 13.2% a year ago, and 9.0% in June. Growth in India's industrial production in July slowed down on fall in growth in manufacturing, especially consumer durable goods. The manufacturing sector, which accounts for almost four-fifths of the total weight of the Index of Industrial Production, grew 7.2% compared with 14.3% a year ago.

Output of consumer durables for the month declined 3.2% compared with a growth of 16.1% a year ago. The industrial output growth in July is below consensus estimates. According to a NewsWire18 poll of 11 analysts, industrial production in July was seen growing 9.7%. Industrial growth in Apr-Jul, the first four months of 2007-08, grew 9.6% compared with 11.1% in the same period of last year. In July, electricity generation and mining output grew 7.5% and 4.9%, respectively.

Shubda Rao of Yes Bank said that July mining growth stood at 4.9% which are a shocker. The numbers may have been lower due to inventory problems and floods. Moderation seems to have set in for industrial growth.

She further said that a small part of the numbers can be explained by the base effect and will not have to reduce GDP guidance significantly at this point. She maintains GDP growth estimates at 8.5%. She said that gradual tapering down in used based products have seen and hence, August jump may not be dramatic and phenomenal.

"The slowdown in industrial production was anticipated, as there were signs of a slowdown setting in, especially in retail credit. Going forward, this is not likely to be a trend. The growth for the remaining part of the year will be in the range of 8-9%. Manufacturing will remain sluggish compared to last year, especially in segments that depend on leveraged demand," said Abheek Barua, chief economist of HDFC Bank to NW 18.

July Manufacturing Growth stood at 7.2% vs 14.3% (YoY); July Consumer Durables output was down 3.2% vs growth of 16.1% (YoY); Electricity Growth stood at 7.5% vs 8.9% (YoY); July Mining growth stood at 4.9% vs 5.1% (YoY).

A Prasanna, Economist said that he is optimistic about August numbers but will have to march down full year numbers. He further said that the GDP guidance will not have to reduce significantly at this point. He maintains GDP growth estimates at 8.5%.

Shanti Ekambaram, ED & CEO, Kotak Mahindra Capital said that auto has shown slowdown but India story is fundamentally is still sound. Emerging markets have held much stonger in face of US situation and the liquidity in EMs is reasonably managed as of now.

She further said that we will be impacted by global factors but underlying fundamentals remain positive. With the busy season coming in, some amount of liquidity should come in. There could be some amount of stability in interest rate scenario. Infrastructure, ancilliaries, Financial Services and gradually consumer sectors should outperform, she believes.

	Jul-07	Jul-06
Total industry output	7.1	13.2
Mining	4.9	5.1
Electricity	7.5	8.9
Manufacturing output	7.2	14.3
of which
Basic Goods	9	10
Capital Goods	12.9	18.3
Intermediate goods	4.7	10.7
Consumer goods	5.3	16.8
of which
Consumer durables	(-) 3.2	16.1
Consumer non-durables	8.4	17.1

Following is a breakdown of output by sectors of the Central Statistical Organization's Quick Estimate of the Index of Industrial Production (Base Year: 1993-1994=100)

		2007	2006	2007	2006
	Weight	July	July	Apr-July	Apr-July
Manufacturing	793.58	7.20%	14.30%	10.30%	12.30%
Mining	104.73	4.90%	5.10%	3.10%	4.00%
Electricity	101.69	7.50%	8.90%	8.10%	6.10%
General	1000	7.10%	13.20%	9.60%	11.10%