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India’s IIP Falls

India’s IIP FallsIndia’s IIP Falls

India’s industrial output contracted by 0.8% 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 the government to boost demand.

Factory output measured in terms of the Index of Industrial Production had expanded by 3% in April last year. As per the index of industrial production (IIP), capital goods output, a barometer of investment, declined sharply by 24.9% in April as against a growth of 5.5% in the same month last year, dna reported.

The Central Statistics Office data released Saturday revealed that manufacturing, which constitutes over 75% of the index, contracted by 3.1% in contrast to a growth of 3.9% in April last year.

Industrial production had declined by 1.6% in January this year. The IIP had registered a growth of about 2% in February. The provisional estimate of 0.1% growth in March was revised slightly upwards to 0.3%.

Observing that delay in monsoon could limit room for a rate cut by Reserve Bank of India, 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 by 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% 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% in April as against a growth of 2.8% year ago.

The consumer non-durable segment output too declined 9.7% against a growth of 3.7% year ago.

Financialtribune.com