Factory output contracts for third month, dips 1.5% in January

Surabhi Updated - January 20, 2018 at 03:44 AM.

Manufacturing sector performance shrinks 2.8%

iip-data

Factory output contracted for the third consecutive month in January led by a sharp dip in manufacturing sector performance, putting further pressure on the Reserve Bank of India to lower key rates to help boost growth.

Official data released on Friday revealed that the Index of Industrial Production contracted 1.5 per cent in January 2016 against 2.6 per cent growth a year ago. On a cumulative basis, IIP grew 2.7 per cent between April and January 2016.

The IIP for December 2015 was revised marginally to a negative of 1.2 per cent from the earlier estimate of a contraction of 1.3 per cent. It fell 3.2 per cent in November.

In January 2016, manufacturing sector performance contracted 2.8 per cent against a growth of 3.4 per cent, a year ago. However, both mining and electricity sectors remained in the positive and grew 1.2 per cent and 6.6 per cent respectively.

“In terms of industries, 10 out of the 22 industry groups in the manufacturing sector have shown negative growth in January 2016,” said an official statement, adding that the industry group electrical machinery and apparatus registered the sharpest decline, followed by the group publishing, printing a reproduction of recorded media.

Slowdown in investments

Indicating the continued slowdown in investments, amongst use-base industries, capital goods showed the sharpest decline at 20.4 per cent in January 2016 as against a 19 per cent drop in the previous month.

Intermediate goods grew 2.7 per cent while basic goods rose 1.8 per cent in January 2016.

Further, reflecting muted demand at the retail level, there was no growth in consumer goods too in January, with consumer durables growing 5.8 per cent while consumer non-durables dipping 3.1 per cent.

Negative sign

Industry body Assocham said the latest IIP estimates are a negative sign towards the growth cycle of industrial activity. Assocham President Sunil Kanoria said, “The negative growth of General Index further worsens the prevailing levels of demand-supply imbalances in the country.”

Published on March 11, 2016 12:22