One of the main factors contributing to this slowdown is the continuing slide in capital goods output compounded with the anticipated decline for consumer goods.

This pessimism stems from the trends in consumer goods output which after surging up to 9.9 per cent in June 2000, started decelerating to touch 5 per cent in August, 2000.

The prospects for the acceleration in industrial growth rate in the second half of the year is limited by a number of factors including the recent deceleration in growth in a major part of the consumer goods sector, according to an Assocham release. Production of consumer non-durable goods - which accounts for 23 per cent of the total industrial output - has slowed down sharply with growth rates steadily decelerating from 5 per cent in April 2000, to just 0.8 per cent in August. There was only a modest pick up in the consumer durable segment from 16.8 per cent in April to 18 per cent in August this year.

The demand for consumer non-durable goods is likely to be affected by the slackening rural demand in the coming months. One of the factors leading to this is lower levels of agricultural output predicted for the coming months.

The estimate of kharif grain output has been lowered from 103.9 million tonnes (MT) to 102.7 MT. The kharif rice output is also expected to be 1.5 MT lesser than 75.63 MT achieved last year.

The water storage position in the country's 70 major reservoirs has been very low thereby dampening the prospects of a good rabi crop.

The overall storage position at the end of September was below the average of 27 per cent.

Another important factor that would restrict industrial growth during the second half og the year would be the escalating fuel prices, the release added.