Dashing hopes of recovery, industrial production contracted by 3.2 per cent in November - the lowest level in over four years - due to poor performance of manufacturing sector and a sharp decline in capital goods output.
The Index of Industrial Production (IPP) measuring factory output, grew at 5.2 per cent in November 2014, as per the data released by the Central Statistics Office (CSO) on Tuesday.
This is the worst performance since October 2011 when IIP had contracted by 4.7 per cent.
The industrial production growth in October was slightly revised upwards to 9.9 per cent from provisional estimates of 9.8 per cent released in December 2015.
The manufacturing sector, - which constitutes over 75 per cent of the index - contracted by 4.4 per cent as against a growth of 4.7 per cent in the same month in the previous.
Seventeen out of 22 industry groups in the manufacturing segment showed negative growth during November 2015 compared to the corresponding month of the previous year.
Capital goods output, which is a barometer of investment, contracted by 24.4 per cent in November 2015 compared to a growth of 7 per cent in same month of previous year.
The electricity sector, which constitutes about 10 per cent of the index, also showed dismal performance as it grew by meagre 0.7 per cent in November 2015 compared to 10 per cent growth in same month a year ago.
The mining sector output grew by 2.3 per cent in November 2015 against 4 per cent growth in the same month a year ago.
Overall consumer goods production grew at 1.3 per cent in November 2015 against contraction of 1.6 per cent in same month of 2014.
Production of consumer durables goods grew by 12.5 per cent in November 2015 as against a contraction of 14.5 per cent in the same month a year ago.
Consumer non-durable goods’ output declined 4.7 per cent in November 2015 compared to 7 per cent growth in same month a year ago.
“The negative growth of General Index further worsens the prevailing levels of demand-supply imbalances in the country. The significant shrinkage in the production of capital goods and consumer non-durables shows that industrial revival is going to be one of the major challenges in days to come,” Assocham secretary-general D.S. Rawat said.
PHD Chambers of Commerce and Industry President Mahesh Gupta said, “Going ahead, efforts should be taken to enhance disposable income of households vis-à-vis simplification of taxation system and enhanced tax incentives to individuals and reduction in the interest rate scenario.”
In the April-November period, the industrial production grew at 3.9 per cent against 2.5 per cent growth in the same period of previous year.
The mining output grew at 2.1 per cent compared to 2.5 per cent growth in the corresponding period in 2014-15.
Overall consumer goods production grew by 4.1 per cent compared a contraction of 5.7 per cent.
During April-November the consumer durables growth works out to be 11.9 per cent compared to a decline of 15.9 per cent in the eight months period in 2014.
