Industrial production slips into -ve zone, shrinks 0.8%

Pulled down by the poor show by manufacturing and capital goods sectors, the industrial production in India shrank by 0.8 per cent in April in its first decline in three months. 

Factory output measured in terms of the Index of Industrial Production (IIP) had expanded by 3 per cent in April last year, the data released by Central Statistics Office (CSO) on Friday showed.

Disappointing data may add to the clamour for rate cut by the Reserve Bank of India. The IIP had registered a growth of about 2 per cent in February this year. The provisional estimates of 0.1 per cent growth in March this year was revised slightly upwards to 0.3 per cent. 

The IIP declined by 1.6 per cent this January. Manufacturing sector which constitutes over 75 per cent of the index, contracted by 3.1 per cent in April this year compared to a growth of 3.9 per cent in same month last year.

Similarly the capital goods output, which is a barometer of investment, declined sharply by 24.9 per cent in April compared to a growth of 5.5 per cent during the same month last year.

Showing lower demand, overall consumer goods output dipped by 1.2 per cent in month under review as against a growth of 2.8 per cent year ago. The consumer non-durable segment showed decline in output by 9.7 per cent compared to a growth of 3.7 per cent year ago. However, the consumer durable sector showed an uptrend by recording a growth of 11.8 per cent, up from 1.3 per cent a year ago.

On the positive side, power generation recorded a growth of 14.6 per cent as against a marginally decline of 0.5 per cent a year ago.

Mining sector, showed some improvement recording a growth of 1.4 per cent as against a contraction of 0.6 per cent a year ago.

Overall, 9 of the 22 industry groups in manufacturing sector showed negative growth in April 2016 as compared to year ago period. The industry group ‘electrical machinery & apparatus’ has shown the highest negative growth of (-) 55.9 per cent, followed by (-) 24.5 per cent in food products and beverages and (-) 17.6 per cent in tobacco products in April.

On the other hand, ‘furniture; manufacturing’ showed the highest positive growth of 28 per cent followed by 18.8 per cent in radio, TV and communication equipment & apparatus, and 18.7 per cent in office, accounting & computing machinery. As per use-based classification, the growth rates in April 2016 over April 2015 are 4.8 percent in Basic goods and 3.7 percent in Intermediate goods.

Some important items that registered high negative growth in April include cable, rubber insulated (-) 96.2 per cent, aluminium foils (-) 66.3 per cent and sugar (-) 65.3 per cent. 

On the other hand, ATF (102.5 per cent), leather garments (40.1 per cent), gems and jewellery (34.4 per cent), and telephone instruments, including mobile phone and accessories (30.1 per cent) showed positive growth.