Factory output contracted 1.6 per cent in May, largely due to poor show in the manufacturing and mining sectors, as a slackening economy showed no signs of turnaround.
This was a significantly weak performance compared with the 1.9 per cent growth in the index of industrial production (IIP) in April and 2.5 per cent growth in May 2012.
The manufacturing sector, which accounts for 75 per cent of the IIP, recorded a two per cent decline in May against 2.6 per cent growth seen in same month last year.
Mining output fell 5.7 per cent in May, somewhat better than the 8.6 per cent decline seen in the same month last year.
The official IIP data for May were released on Friday after the stock markets closed.
Henceforth, all factory output, gross domestic product and retail inflation data will be released by the Central Statistics Office on their respective scheduled dates only at 5.30 p.m. – well after the stock markets are closed for that day.
For April-May 2013, IIP grew a meagre 0.1 per cent, down from 0.6 per cent in same period last year. In this period, manufacturing grew 0.1 per cent, lower than 0.4 per cent in the same period last year.
With retail inflation also rising, along with the sharp fall in the rupee against the dollar in recent weeks, the scope for a policy rate cut by the central bank in end-July has diminished, say economy watchers.
Capital goods output declined 2.7 per cent in May against a decline of 8.6 per cent in same month last year.
Reacting to the IIP numbers, Assocham President Rajkumar Dhoot said Indian industry had slipped into a serious crisis with half of the 22 groups in the manufacturing sector showing negative growth.
“If this situation is allowed to persist, it is feared that the industry may see large-scale job losses. The precarious situation is well reflected in several passenger car and commercial vehicles halting production for weeks as they are not able to clear the inventory,” Dhoot said.
srivats.kr@thehindu.co.in