India's industrial output grew 0.1 percent in July against the analysts' expectation of a 0.5 percent growth as compared to that in the same period a year ago, showed the data released by the Indian government Wednesday. The Index of Industrial Production (IIP) contracted 1.8 percent in June.

The cumulative growth for April-July, 2012-13, over the corresponding period of the previous year declined 0.1 percent, suggesting that the weakened economy shows no signs of recovery in the near future.    

The mining sector recorded a decline of 0.7 percent compared to a 0.6 percent growth in June, and the manufacturing sector output declined 0.2 percent in July as compared to the 3.2 percent decline in June while the electricity sector grew 2.8 percent against the 8.8 percent growth in the previous month, as recorded in the data released by the Central Statistics Office of the Ministry of Statistics and Program Implementation.

Consumer durables recorded a growth rate of 1.4 percent while consumer nondurables grew 0.1 percent. In June 2012, consumer durables recorded a robust growth rate of 9.1 percent while consumer nondurables declined 1 percent.

The basic goods grew 1.5 percent in June. However, the capital goods sector declined 5 percent in July, better than the sharp decline of 27.9 percent in June.

The economists are of the view that though there is nothing to cheer about, it is indeed a relief from the contraction of growth a month ago.

"One of the things that we can look forward to, is a push from govt on the infra side - like road, coal power etc. Those could see a turnaround once that happens. But if we are talking about private sector investment, there will be a certain time lag for a pick-up in sentiment," said Aditi Nayar, an economist from ICRA, to NDTV Profit, a business news channel.

"The data highlights structural weaknesses of the economy, with poor domestic demand amid political gridlock and contracting exports," said Dariusz Kowalczyk, senior strategist at Credit Agricole CIB in Hong Kong, to the Economic Times.

Though the data is expected to give strength for industries' demand for monetary easing, analysts believe that it is highly unlikely that RBI will change the key rates.

"It may lead to renewed expectations of a rate cut this month, although we believe that the odds still favor the RBI to stay put," Kowalczyk said.

India's BSE Sensex was trading at 17937.05, up 85.02 points or 0.48 percent and NSE Nifty was up 21.90 points or 0.41 percent at 5411.40 at 12.20 p.m. Wednesday.

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