With slump in manufacturing, mining and capital goods segments, industrial production contracted by 0.7 per cent in August for the second month in a row. The Index of Industrial Production (IIP) slump in August is lower than July. However, on cumulative basis, the factory output in April-August contracted by 0.3 per cent, compared to growth of 4.1 per cent in the year-ago period, according to Government data which was released on Monday.
The factory output, measured by movement in IIP, had slipped to 8-month low of (-) 2.49 (revised) in July on account of declining output mostly in manufacturing and capital goods sectors. The data showed the manufacturing sector, which constitutes over 75 per cent of the IIP index, contracted by 0.3 per cent in August as against 6.6 per cent expansion in the same month last year. The capital goods output also registered a steep decline of 22.2 per cent in the month, against a growth rate of 21.3 per cent in last year.
However, India Inc believes that the current out data reflects slow investment climate and poor manufacturing growth in the country, but there would be revival phase in coming months due to good monsoon and cut in interest rates. “The depressed private investment climate and global economic growth continues to impact the manufacturing sector growth in India. Private investment activity remains sluggish and calls for sustained efforts to address the structural bottlenecks in the economy”, said A Didar Singh, Secretary General, FICCI.
“Satisfactory monsoons, upcoming festive demand recent cuts in interest rates, have the potential to lift the growth in coming months”, added Singh. As far as slump indication is concerned, the data also revealed that mining activities shrunk by 5.6 as in August this year as against a growth of 4.5 in August 2015. Power generation remained almost flat (0.1 per cent) in compared to an expansion of 5.6 per cent in the year ago period. Output of consumer durables registered a growth of 2.3 per cent too while growth in non-durables segment was almost flat. Overall, consumer goods production recorded a growth 1.1 per cent in August compared to 6 per cent a year ago.
In terms of industries, seven out of 22 industry groups in the manufacturing sector have shown negative growth during August year-on-year. Some important items showing high negative growth during the current month include cable, rubber insulated, sugar machinery, woollen carpets, gems and jewellery, and rice. Some important items that have registered high positive growth include fruit pulp, air conditioner, instant food mixes, ship building and repairs, scooter and mopeds, stainless/alloy steel and boilers.