Expert views on Feb industrial output data

India's industrial output rose a much slower-than expected 4.1% in February from a year earlier, government data showed on Thursday.

Manufacturing output, which constitutes about 76% of industrial production, rose an annual 4.0% from a year earlier, the statistics office said. COMMENTARY A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI "The data confirms that the IIP growth is in trend with the yearly growth of 4%. But the data is not good at all as even after growth bottomed out in third quarter (October-December), the recovery is not really picking up on the demand side. "Such higher interest rates in the economy will affect demand-side improvement. From RBI's policy perspective, we still think that there is scope for just 25 basis point rate cut in April as given that inflation is moderating only on the margin, and growth in 2012-13 is expected to be according to RBI's trend line of 7%, there is no much scope for bigger rate cuts." SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI "We were expecting a better number, above 6%. Overall, this is disappointing, but our sense is that irrespective of IIP, the RBI will go ahead with a 25 basis point rate cut at the upcoming policy decision." BACKGROUND - India's economy probably expanded 6.9% in the 2011-12 fiscal year that ended on March 31, its slowest pace in three years. - The government expects a better showing in 2012-13 and has pegged growth at 7.6% for the new fiscal year. - Manufacturing sector expansion slowed for a third month in March as growth in new orders eased and costs for raw materials kept rising, a business survey showed. - Growth in the Indian services sector slipped to a five-month low in March as optimism about the business outlook in the coming year faded to its weakest level since 2009, a survey showed last week. - India's headline inflation edged up to 6.95% in February on higher food costs. - The Reserve Bank of India (RBI) is widely expected to cut the repo rate - the main policy rate - by 25 basis points to 8.25% to spur growth when it reviews policy next Tuesday. - The RBI has already cut banks' reserve requirement by 125 basis points in two moves since late January, making more money available for lending.