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Pulled down by a sharp fall in manufacturing performance, the country’s factory output grew a tepid 2.7 per cent in May against 5.6 per cent in the same month last fiscal.
The Index of Industrial Production (IIP) growth for April 2015 is now lower at 3.36 per cent from an earlier estimated 4.1 per cent, official data released on Friday showed. For the April-May 2015 period, IIP recorded a growth of 3 per cent against 4.6 per cent in the first two months of the last fiscal.
Manufacturing — with a weightage of 75 per cent in the IIP — registered a growth of only 2.2 per cent in May, lower than the 5.9 per cent in May 2014. In April, manufacturing recorded 5.1 per cent growth, and was seen as a pointer to some revival in industrial activity.
Rate cut pressure The slower-than-anticipated growth in industrial output in May could prompt the Reserve Bank of India to consider another rate cut at its next monetary policy review, on August 4, say economy watchers. However, the spread of the monsoon will weigh more on the RBI Governor’s mind.
Among other sectors, mining and electricity generation fared well, expanding 2.8 per cent (2.5 per cent) and 6 per cent (6.7 per cent), respectively.
Under the use-based classification, there was sharp fall in the performance of both capital goods and consumer goods in May. While capital goods, which had logged double digit growth rates in recent months, grew a modest 1.8 per cent (4.2 per cent), consumer goods output contracted 1.6 per cent (growth of 4.6 per cent in May last year).
Consumer durables output contracted 3.9 per cent against growth of 3.6 per cent in the same month last year, while consumer non-durables contracted 0.1 per cent (growth of 5.2 per cent).
Low demand, a concern Reacting to the latest IIP numbers, Federation of Indian Chambers of Commerce and Industry President Jyotsna Suri said negative consumer demand growth was an area of concern, and expressed hope that government would bring out specific measures to stimulate demand in the economy.
State Bank of India’s Chief Economic Advisor Saumya Kanti Ghosh said the IIP numbers are ‘disappointing’.
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