"The negative growth of manufacturing has got serious implications for the overall growth, employment and trade balance," Assocham Secretary General D S Rawat said.

"The RBI needs to take a constructive view while undertaking the mid-quarter review of its credit policy," he added.

The manufacturing sector, which constitutes over 75 percent of the index, declined 0.7 percent in January as against growth of 2.7 percent in the year-ago period.

"Since WPI inflation and CPI inflation are in the softening trend and subsiding month after month, RBI at this juncture should come forward to reduce the policy rates and help the industrial activity to recover at a faster pace," PHD Chamber of Commerce President Sharad Jaipuria said.

The marginal improvement in the index of industrial production (IIP) was mainly on account of higher power generation and mining sector output, while manufacturing declined.

Power generation posted a growth of 6.5 percent in January, compared with 6.4 percent in the same month of 2013. Expansion in power generation was 5.7 percent in April-January from 4.7 percent a year ago.

The mining sector, with a weight of about 14 percent in IIP, grew 0.7 percent in January as against a dip of 1.8 percent in the same month in 2013. During April-January, mining output shrank 1.5 percent as against a dip of 1.8 percent a year earlier.

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