India's manufacturing sector grew at the weakest rate in nine months in August amid high fiscal deficit, fragile external demand, and falling private investment, a fresh survey by HSBC said.

According to the seasonally adjusted HSBC Purchasing Managers' Index (PMI), factory production or manufacturing sector growth slipped from 52.9 in July to 52.8 in August. The decline appears to very petite, but it was the lowest manufacturing PMI in nine month.

The index, however, has showed growth in the manufacturing sector. It should be noted here that a reading of above 50 represents expansion, while a reading of below 50 stands for contraction.

Along with several other factors, the major power failures in early August also disrupted production. HSBC chief economist for India and ASEAN Leif Eskesen said that apart from disrupting production, power failures led to an increase in work backlog.

Speaking on the topic, Eskesen said, "The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August."

Export orders slipped for the second month in a row in August because of weaker international demand and unfavorable exchange rate conditions.

Meanwhile, Morgan Stanley lowered its forecast for India's growth its earlier estimate of 5.8 per cent to 5.1 per cent for the current fiscal year.