India’s factory output remained subdued for the second consecutive month – decelerating by (-) 0.7 per cent in August from a decline of (-) 2.49 per cent in July and a 6.3 per cent rise in the same month last year, official data showed, while India Inc called for efforts to address structural bottlenecks in a context where private investment remains sluggish.
As per the data on Index of Industrial Production (IIP) released by the Central Statistics Office (CSO), the fall was mainly on account of a (-) 0.3 per cent drop in manufacturing output, which also has the maximum weight in the overall index.
Among the other two major sub-indices, electricity generation inched up by 0.1 per cent while that for mining declined by (-) 5.6 per cent.
The cumulative growth of the country’s factory output declined by (-) 0.3 per cent in the first five months of the current fiscal, as against cumulative growth of 4.1 per cent during the corresponding period of last fiscal.
In addition, the data revealed that among the six use-based classifications of the index, the output of consumer durables segment expanded by 2.3 per cent in August.
The consumer goods segment’s output increased by 1.1 per cent, whereas the consumer non-durables segment inched-up by 0.1 per cent.
However, capital goods segment, which is a key indicator of economic activity plunged by (-) 22.2 per cent.
The basic and intermediate goods’ output rose by 3.2 per cent and 3.6 per cent, respectively.
Overall, only seven out of the 22 industry groups in the manufacturing sector have shown negative growth during the month under review.
Segment-wise, growth was witnessed in ‘fruit pulp’ (762 per cent), ‘air conditioner (room)’ (59.1 per cent), ‘instant food mixes (ready to eat)’ (46.5 per cent), ‘ship building and repairs’ (41.1 per cent), ‘scooter and mopeds’ (33.3 per cent), ‘stainless/ alloy steel’ (31.8 per cent), and ‘boilers’ (22.8 per cent).
High negative growth was reported in the ‘cable, rubber insulated’ ((-) 86.2 per cent), ‘sugar machinery’ ((-) 65.5 per cent), ‘wollen carpets’ ((-) 35.7 per cent) and ‘gems and jewellery’ ((-) 31 per cent).
Commenting on the data, industry chamber Ficci said: “The depressed private investment climate and global economic growth continues to impact the manufacturing sector growth in India.”
“Private investment activity remains sluggish and Ficci calls for sustained efforts to address the structural bottlenecks in the economy,” said its Secretary General A. Didar Singh.
Industry body Assocham described the data as “a dampener with a huge drop in capital goods, meaning thereby the investment cycle is stubbornly stuck in a shell”.
“Even the manufacturing reporting degrowth and electricity not making any move is a matter of concern and the IIP scenario does not really gel well with the big picture target of 7.6 per cent growth,” Assocham Secretary General D.S. Rawat said in a statement, adding it was “time to consider some serious measures” to boost consumption-driven demand, leading to new investment.