New Delhi, Feb. 12: Industry growth fell to 7.6 per cent in December from 13.4 per cent a year ago, raising fears of a slowdown among analysts.

According to Rajiv Kumar of the Indian Council of Research in International Economic Relations, “It seems (to be) the beginning of the downturn. The decline is because of the rising rupee, higher interest rates and weak demand for consumer durables.”

On whether high interest rates affected growth, commerce minister Kamal Nath said, “I do not know but that could be one of the reasons.”

“We perhaps need to have a meeting with industry to find out what the reason is,” he said.

Sonal Varma, economist with Lehman Brothers, said December’s growth rate was decent given the high base year for comparison — 13.4 per cent growth in December 2006.

However, Lehman was not upbeat on the future. “We expect industrial output to remain weak in the first quarter of 2008 on account of rupee appreciation, high interest rates and a weakening external demand,” Varma said.

Global credit rating agency Moody’s, however, gave a different opinion.

“Manufacturing growth in the final month of 2007 came in stronger than what we had expected. Solid production activity will continue to fuel economic expansion in India,” it said.

The manufacturing sector grew 8.4 per cent compared with 14.5 per cent a year ago.

In mining and electricity, growth remained sluggish at 3 per cent and 3.8 per cent, respectively.

A year ago, mining grew 6.1 per cent, while electricity growth was higher, still, at 9.1 per cent.

Growth in consumer goods fell to 8.7 per cent compared with 10.7 per cent a year ago.

In consumer non-durables, growth declined to 10.6 per cent from 13.5 per cent.

Consumer durables segment showed a marginal improvement of 2.2 per cent growth from 1.8 per cent a year ago. The slippage was quite marked in basic goods where growth fell to 3.1 per cent compared with 12.4 per cent in the previous year.

Capital goods, however, showed healthy growth of 16.6 per cent during December, though down from a high of 26.2 per cent a year ago.