Contraction of manufacturing sector output pulled down the industrial production in July to a disappointing 0.1 per cent in July, prompting the government to assert that efforts will continue to find out practical solutions to boost growth.

Worried over the dismal Index of Industrial Production (IIP) numbers, India Inc stepped up its demand for at least least 0.50 per cent cut in interest rate by the Reserve Bank in its policy review on Monday.

As per the IIP data, the industrial growth during the four-month period ending July 2012, contracted by 0.1 per cent, as against the growth of 6.1 per cent in the same period last fiscal. During July itself, the growth rate slowed down to 0.1 per cent from 3.7 per cent a year ago.

The performance of the economy continues to be disappointing, Finance Minister P Chidambaram said, adding, "The central government is intensively engaged with industry on the constraints that affect industrial production and will continue its efforts to find practical solutions to the problems".

The sector-wise performance reveals a mixed picture, he said. "There are gains in some areas but there are slippages in some other areas. There is no clear pattern yet," he added.

On sequential basis, the IIP data showed that July's growth at 0.1 per cent was an improvement over (-) 1.8 per cent recorded in June.

The worst performer has been the manufacturing sector, which constitutes over 75 per cent of the index, showing a decline of 0.2 per cent in July, and 0.6 per cent in the April-July period.

Concerned over the performance of the manufacturing sector, industry chamber Ficci urged the "RBI to cut down interest rates further at least by another 50 basis points immediately".

Among the different industrial segments, production of capital goods, which refers to the equipment used by industry to produce consumer items, declined by 5 per cent. During the April-July period, the output of the sector contracted by 16.8 per cent.

"The economy is in need of sentiment boosters. Investments have dried up... It is imperative that non- legislative policy measures are announced at the earliest, which could help improve confidence levels in the economy," industry chamber CII said.

The Reserve Bank is scheduled to announce its mid- quarterly review of monetary policy on Monday which might contain some steps to boost growth.

Earlier in the day, Chidambaram met the heads of nine blue chip state-owned companies including NTPC, SAIL and ONGC to nudge them to expedite their investment plans with a view to improving industrial climate and boosting growth.

These PSUs are reportedly sitting over cash pile of Rs 1.8 lakh crore. The PSU chiefs on their part urged the government to address issues concerning project clearances and availability of coal.