The Index of Industrial Production (IIP) contracted at an astonishing (-) 3.5 per cent in March versus 4.1% in the month of February. While themining sector contracted at (-) 1.3% versus 2.1% in February, the capital goods sector provided the biggest shock with a -21.3% contraction versus a growth of 10.6% in February.

The Industrial production growth slow has slowed to 2.4 per cent in 2011-12 from an 8.2 per cent expansion in 2010-11.

The manufacturing sector also contracted at 14.4% versus a growth of 4% in February. The Basic goods sector grew at 1.1% versus 7.5% in February.

India’s economy, once a key driver of growth in Asia, has slowed considerably due to surging inflationary pressures, which have resulted in high interest rates. A sustained pick-up in industrial output is not yet in sight, economists say.

However, there are a few bright spots in the faltering Indian growth story that might boost the industrial output number ahead.

An uptick in both the manufacturing and services purchasing managers’ index numbers for April offers room for optimism. So does the surprisingly sharp rate cut by the central bank at its April meeting in an effort to boost the slowing economy.

Finance minister Pranab Mukherjee has said reversal of policy rates will help revive investments and boost business sentiments and the government was committed to keeping subsidy at below 2% of GDP in current financial year.

The Indian economy is more resilient than many other nations to withstand this fresh round of global economic turmoil, as the bulk of India’s GDP is domestic demand driven, he said according to an official statement.

India’s services sector growth accelerated a touch in April thanks to a rise in new business, and optimism hit its highest level since June 2011, a survey showed.