In yet another sign that all's not well with the economy, India's factory output growth crawled at 0.1% in July against 3.7% in July last year.

The slow growth rate will hurt employment even more as businesses, squeezed by the high input and borrowing costs, are holding back expansion plans.

According to data released on Wednesday, the July growth rate was, however, higher than the 1.8% negative growth rate in June. But finance minister P Chidambaram said: "The IIP estimates reveal that the performance of the economy continues to be disappointing".

During the month, exports contracted by 14.8%, the steepest fall in three years, as orders from Europe - hit by debt worries - continued to dry up.

Price hikes-retail inflation was 9.86% and wholesale inflation 6.87% in July -and plunging investments have made it difficult for Chidambaram, who has been struggling against the policy logjam and a shaky world economy.