Industrial output contracted by 0.8 per cent in April, the first decline in three months, due to drastic fall in capital goods production and manufacturing activities, prompting demands for pro-active measures by government to boost demand.
Factory output measured in terms of the Index of Industrial Production (IIP) had expanded by 3 per cent in April last year.
As per the IIP, capital goods output, a barometer of investment, declined sharply by 24.9 per cent in April as against a growth of 5.5 per cent in the same month last year.
The Central Statistics Office (CSO) data released today revealed that manufacturing, which constitutes over 75 per cent of the index, contracted by 3.1 per cent in contrast to a growth of 3.9 per cent in April last year.
Industrial production had declined by 1.6 per cent in January this year.
The IIP had registered a growth of about 2 per cent in February. The provisional estimate of 0.1 per cent growth in March was revised slightly upwards to 0.3 per cent.
Observing that delay in monsoon could limit room for rate cut by RBI, industry body Assocham asked the government to urgently take pro-active steps to check the supply situation and help the industry maintain growth momentum.
Devendra Kumar Pant, Chief Economist, India Ratings opined that efforts of the government to kick start investment and increase manufacturing base will take more time.
“Investment growth is unlikely to improve any time soon and government (center and states) with 16 per cent share has limited capacity to kick start investment,” he said.
The IIP data showed lower demand as overall consumer goods output dipped by 1.2 per cent in April as against a growth of 2.8 per cent year ago.
The consumer non-durable segment output too declined 9.7 per cent against a growth of 3.7 per cent year ago. On the other hand, 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.
Industry chamber FICCI said there is an unfinished agenda of the reforms which the present government is trying to address.
The manufacturing sector growth is dependent on many other factors too like the overall demand scenario in the economy which needs to be further encouraged, it said.
Overall, 9 of the 22 industry groups in manufacturing sector showed negative growth in April 2016.
Some important items that registered high negative growth during the month include ‘cable, rubber insulated’ (-) 96.2 per cent, ‘aluminium foils’ (-) 66.3 per cent, ‘sugar’ (-) 65.3 per cent, and ‘heat exchangers’ (-) 65.3 per cent.
Some important items showing high positive growth include aviation turbine fuel (102.5 per cent), leather garments (40.1 per cent), gems and jewellery (34.4 per cent), telephone instruments including mobile phone and accessories (30.1 per cent), and aerated waters and soft drinks (28.2 per cent).