Slowing overall production activities in almost all sectors, mostly in manufacturing and capital goods sectors, the industrial growth contracted by 0.8 per cent in April - the first decline in three months. With such poor show having the disappointing numbers, the industry veterans may clamour for rate cut by the Reserve Bank of India (RBI) in its next policy review.
As per the data released by Central Statistics Office (CSO) on Friday, factory output, which is measured in terms of the Index of Industrial Production (IIP), had expanded by 3 per cent in April last year. The IIP had registered a growth of about 2 per cent in February this year. The provisional estimates of 0.1 per cent growth in March this year, was revised slightly upwards to 0.3 per cent. The IIP declined by 1.6 per cent this January.
The production activity in manufacturing sector which constitutes over 75 per cent of the index, contracted by 3.1 per cent in April this year compared to a growth of 3.9 per cent in same month last year. Similarly, the capital goods output being a barometer of investment, also declined sharply by 24.9 per cent in April compared to a growth of 5.5 per cent during the same month last year.
“The growth in manufacturing may take some more time to pick up as the measures taken by the Government in the last few months start yielding results,” said FICCI President Harshavardhan Neotia.
“There is an unfinished agenda of the reforms which the present Government is trying to address. The manufacturing sector growth is dependent on many other factors too like the overall demand scenario in the economy which needs to be further encouraged,” added Neotia.
However, overall consumer goods output dipped by 1.2 per cent in month under review as against a growth of 2.8 per cent year ago. The consumer non-durable segment showed decline in output by 9.7 per cent compared to a growth of 3.7 per cent year ago.
However, the consumer durable sector showed an uptrend by recording a growth of 11.8 per cent, up from 1.3 per cent a year ago. On the positive side, power generation recorded a growth of 14.6 per cent as against a marginally decline of 0.5 per cent a year ago.
Mining sector, showed some improvement recording a growth of 1.4 per cent as against a contraction of 0.6 per cent a year ago. Overall, 9 of the 22 industry groups in anufacturing sector showed negative growth in April 2016 as compared to year ago period.
The industry group 'electrical machinery & apparatus' has shown the highest negative growth of (-) 55.9 per cent, followed by (-) 24.5 per cent in food products and beverages and (-) 17.6 per cent in tobacco products in April. On the other hand, 'furniture’ manufacturing' showed the highest positive growth of 28 per cent followed by 18.8 per cent in radio, TV and communication equipment & apparatus, and 18.7 per cent in office, accounting & computing machinery.