The factory output as measured by the Index of Industrial Production (IIP) contracted by 4.2 per cent in October, on account of de-growth in the manufacturing sector and poor demand for consumer goods.
The factory output had declined by 1.2 per cent in the same month last year. For September, it was revised to 2.8 per cent from the provisional estimates of 2.5 per cent released last month. During the April-October period, the IIP rose 1.9 per cent against 0.2 per cent in same period of last fiscal.
“The fall in manufacturing growth in October is disturbing, more so because it is broad-based and not limited to a few sectors,” FICCI President Sidharth Birla said.
It not only reflected slowdown in investments but also the deep rooted slackness in consumer demand which required bringing down the interest rates urgently, he added.
Industry experts expressed concern over the fact that despite being a festive month, growth of consumer goods, especially durables, has been negative in October.
“Sixteen of the 22 industries registered negative growth rates. It is disappointing more so because October is one of the peak spending months when rural incomes increase and two festivals should have prompted consumer spending. It does appear more was spent on gold (imports have increased),” CARE Ratings said.
Manufacturing output, which constitutes over 75 per cent of the index, contracted by 7.6 per cent in October, compared to a dip of 1.3 per cent in the same month a year ago.
Production of capital goods, a barometer of demand, declined by 2.3 per cent, as against a growth of 2.5 per cent. The consumer goods output too contracted by 18.6 per cent as against a decline in output at 5 per cent logged a year ago.
According to the IIP data, power generation grew by 13.3 per cent compared to a growth of 1.3 per cent. However, consumer durables production declined by 35.2 per cent against a dip of 12 per cent. The consumer non-durable goods output contacted by 4.3 per cent compared to 1.9 per cent growth.
