Factory output contracted 4.2 per cent in October year-on-year as manufacturing activity saw a steep decline.
According to Government data for the Index of Industrial Production (IIP), the manufacturing sector index fell 7.6 per cent. Manufacturing accounts for over 75 per cent in the IIP.
However, there was some good news as Consumer Price Index (CPI)-based inflation cooled to 4.4 per cent in November from 5.52 per cent in October because of easing food prices.
But, economists do not see the RBI going in for any policy rate cut for now despite the cooling of retail inflation.
The data for IIP comes with a lag of one month. Mining, which has 14.6 per cent weight in the IIP, grew at 5.2 per cent in October, while electricity grew at 13.3 per cent. Electricity accounts for 10.32 per cent in the IIP.
“The fall in manufacturing growth in October is disturbing, more so because it is broad based and not limited to a few sectors.
“It not only reflects a slowdown in investments but also the deep-rooted slackness in consumer demand, which requires bringing down interest rates urgently,” said Sidharth Birla, President, Federation of Indian Chambers of Commerce and Industry. The IIP for the April-October period grew at 1.9 per cent, led by 10.7 per cent growth in electricity, followed by 2.4 per cent growth in mining and 0.7 per cent in manufacturing.
Going by use-based classification, the basic goods index grew 5.8 per cent in October, while capital goods and intermediate goods fell 2.3 per cent and 3.1 per cent, respectively.
Consumer durables contracted 35.2 per cent in October over the same month last year while consumer non-durables fell by 4.3 per cent.
The CPI-based inflation for November cooled thanks mainly to falling food inflation, which came down to 3.1 per cent in November as against 5.59 per cent in the previous month.
Rural inflation for November came in at 4.09 per cent, down from 5.52 per cent in the previous month, while urban inflation stood at 4.69 per cent, against 5.55 per cent in October.