With a fall in capital goods production and deceleration in mining activity, Industrial output grew by 4.4% in March, which is the slowest in five months, according to the official data released by the Central Statistics Office (CSO) showed on Friday.
Index of Industrial Production (IIP) or industrial output in 2017-18 too decelerated to 4.3 per cent from 4.6 per cent in the previous fiscal. “The IIP grew by 4.4% in March 2017, the same as in March this year, the data said. The previous low at 1.8% was recorded in October 2017,” the CSO data said.
Reacting to the IIP figure, Devendra Kumar Pant, Chief Economist, India Ratings and Research (Fitch Group) said, “One of the major reasons from slower output growth was unfavourable base effect of March 2017. Among used-based classification while growth slowdown was across the board, capital goods output contracted in March 2018.”
“Going forward, while output growth in FY19 is likely to be better than FY18 due to expectation of a normal monsoon, robust vehicle sales, infrastructure focus and sector specific programmes such as housing for all. Faster resolution of stresses assets of banking sector and limiting fiscal slippage will be key factors to watch,” he added.
Manufacturing sector, which constitutes over 77% of the index, grew at 4.4%in March as compared to 3.3% in the same month a year ago. The output of mining sector decelerated to 2.8% during the month as compared to 10.1% in March 2017. Similarly, power generation too slowed down to 5.9% as against 6.2% in March 2017.
Capital goods output, however, declined by 1.8% during March as compared to a growth of 9.4% in the corresponding period last year. Consumer durables output on the other hand showed an increase of 2.9% as against decline of 0.6% in March 2017.
The consumer non-durables segment showed an impressive growth of 10.9%in March as against 7.5% in corresponding month last year. During 2017-18, the manufacturing sector recorded a growth of 4.5%, marginally up from 4.4% in 2016-17. The mining sector as well as power generation reported deceleration to 2.3% and 4.6% from 5.3% and 5.4% respectively in 2016-17.