New Delhi, May 11: India’s industrial output shrank by 3.5 percent in March due to poor show of manufacturing and mining sectors, dampening hope for any early revival of economic growth, government data showed Friday.
This is the first contraction in the factory output since October 2011, when it shrank by 4.7 percent.
The factory output, measured in terms of the Index of Industrial Production (IIP), had registered a growth of 4.1 percent in February year-on-year.
The average industrial output growth for 2011-12 fell to 2.8 percent as compared to 8.2 percent in the previous year, according to data released by the Central Statistics Office.
Chairman of the Prime Minister’s Economic Advisory Council C Rangarajan said the industrial production data was disappointing
“I think this is very disappointing. We had not expected such a sharp decline in industrial production. We have thought of weakening of growth but not negative growth,” Rangarajan said.
Rangarajan said the Reserve Bank of India will take into account the slowdown in industrial output while formulating its policy in the future.
“The Reserve Bank will look at both sets of factors. They will look at the numbers related to industrial production, and they will also look at the numbers relating to inflation,” he said.
The RBI in its annual monetary policy for 2012-13, announced April 17, lowered the key policy rates by 0.50 percent in a bid to revive growth.
Manufacturing sector was the biggest drag on the IIP index in March. Manufacturing sector contracted by 4.4 percent in the last month of the fiscal 2011-12. Mining sector contracted by 1.3 percent. However, electricity sector registered a sluggish 2.7 percent growth.
As per “use-based” classification there has been negative growth in capital goods (-21.3 percent) and intermediate goods (-2.1 percent).
However, basic goods registered growth of 1.1 percent, consumer durables 0.2 percent and consumer non-durables 1 percent.