Factory output dips by 1.2% to four-month low in February

Industrial output slipped to 4-month low, contracting 1.2 per cent in February, mainly on account on decline in the manufacturing sector and lower offtake of capital as well as consumer goods.

The Index of Industrial Production (IIP) had registered a growth of 1.99 per cent in February last year.

For the 11 month period to February of the last financial year, IIP growth was nearly flat at 0.4 per cent as against 2.6 per cent a year ago.

For January, the Central Statistics Office has revised the IIP growth rate to 3.27 per cent from 2.74 per cent in the provisional data released last month.

The previous low was recorded in October when the IIP contracted by 1.87 per cent. Thereafter, it shot up to 5.59 per cent in November.

The decline in the IIP in February is mainly on account of 2 per cent contraction in manufacturing sector, which constitutes over 75 per cent of the index. The sector had recorded a meagre growth of 0.6 per cent in February, 2016.

The capital goods output declined by 3.4 per cent in February over a contraction of 9.3 per cent last year.

Similarly, the overall consumer goods production declined by 5.6 per cent in the month compared to a growth of 0.6 per cent. The non-durable consumer goods output shrank by 8.6 per cent in the month over a contraction of 4.9 per cent year ago.

In the consumer-durable segment, the output dipped by 0.9 per cent in February against a growth of 10.4 per cent in same month last year.

Overall, 15 out of 22 industry groups in the manufacturing sector have shown negative growth in February.

Meanwhile, India Inc on Wednesday pitched for more reforms to create a conducive environment for investments and boost manufacturing as industrial output shrank 1.2 per cent to a four-month low in February.

The fall in industrial output as per data released on Wednesday was mainly on account of a decline in the manufacturing sector and lower offtake of capital as well as consumer goods.

Industry body Assocham termed the latest estimates of industrial production as a negative sign while strongly recommending to the government to initiate more effective short-term revival measures.

It also highlighted the need for creating a conducive environment for investments, capacity utilisation and augmentation of industrial production on priority basis.

The decline in IIP in February is mainly on account of 2 per cent contraction in manufacturing sector, which constitutes over 75 per cent of the index.