Prime Minister Narendra Modi may have exhorted the global community to ‘Make in India’ but the latest official figures show industrial activity in India’s own factories have gone down to less than half a per cent underlining there is no demand for consumer goods among people in India.
India’s industrial output grew at 0.4 per cent for two consecutive months of July and August pulled down due to manufacturing and capital goods sector contraction. Analysts called the production growth as shockingly low which may affect the second quarter (July-September) economic growth numbers.
The manufacturing sector, which constitutes over 75 per cent of the industrial production index, declined 1.4 per cent against 1 per cent, while the capital goods growth shrunk further to 11.3 per cent against 3.8 per cent on a month-on-month basis.
The consumer goods production, which is a proxy for demand in the economy, declined to 6.9 per cent in August against 7.4 per cent from July. Mining sector grew by 2.6 per cent in August as against 2.1 per cent last month. Electricity sector grew 12.9 per cent as against 11.7 per cent previous month. Production of intermediate goods expanded by just 0.3 per cent in August, compared to 2.6 per cent in July.
Basic goods output grew merely 9.6 per cent in August against a growth of 0.9 per cent a year ago. Disappointed by the unexpectedly lower performance by the industry, India Inc urged the government for an intervention.
“There is a need for taking cognisance of the slow growth of industrial production and take steps to revive investment and stimulate demand in the economy. This would entail expediting execution of approved projects and providing a competitive market for coal and mining sectors,” said industry chamber CII.
It, however, said that the recent announcements and policy actions like ‘Make in India’ initiative and ensuring flexible labour policy should help the turnaround, it said.
According to Ficci, “the negative manufacturing growth reinforces the belief that fall in manufacturing growth has not yet bottomed out. It is more worrisome to see negative growth in consumer and capital goods especially when we were hoping the demand to pick up.”
“This requires bold reforms in the business regulatory environment and also certain specific interventions in those sectors that continue to reel under slowdown" Ficci said in a statement.
