Industrial output remains negative, dips 0.5% in March

Industrial output remains negative, dips 0.5% in March

Weak consumer demand and investment pulled down India’s industrial production (IIP) to -0.5 per cent in April year-on-year but as compared to the last month, the number was better than a contraction of 1.8 per cent. For the year as a whole in 2013-14, industrial output remained flat.

Production from mines, factories and utilities fell for a second straight month in March, shrinking 0.5 per cent from a year earlier compared with analysts' median forecast of an annual contraction of 1.5 per cent, states a government data on Monday. Output had fallen a revised 1.8 per cent in February.

Production of capital goods, a barometer of demand, contracted 12.5 per cent, in sharp contrast to an expansion of 9.6 per cent in the same month in 2013. The segment declined 3.7 per cent in 2013-14 over a contraction of 6 per cent in the comparable period. The mining sector, with a weight of about 14 per cent in the IIP, declined 0.4 per cent in March as against a dip of 2.1 per a year earlier. During 2013-14, mining output shrank 0.8 per cent compared with a decline of 2.3 per cent in 2012-13.

The consumer durables segment contracted 11.8 per cent in March as against a decline of 4.9 per cent previously. For the entire financial year, the segment's output fell 12.2 per cent compared with an expansion of 2 per cent in 2012-13.

Only the consumer non-durable growth at 7.2 per cent against -1.2 per cent (MoM) was a positive and had led to the slower shrinkage of the IIP data. Output in consumer non-durables expanded 7.2 per cent compared with 7.3 per cent in March last year and for the entire financial year, it grew 5.2 per cent, at a faster pace than 2.8 per cent in 2012-13. Analysts said that the growth in non-durables cannot be taken as permanent as it may be election related expenses that helped the sector grow faster in March.

Overall, 12 of the 22 industry groups in manufacturing showed negative growth in March as compared to the corresponding month of 2013. Output of consumer goods declined 0.9 per cent in March compared with growth of 1.8 per cent a year ago. During 2013-14, consumer goods output contracted 2.6 per cent against growth of 2.4 per cent in 2012-13. Electricity generation increased 5.4 per cent in March.

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