India's Index of Industrial Production remains negative, dips 0.5 pct in March

Agencies Posted online: Monday, May 12, 2014 at 0000 hrs
New Delhi : Showing no signs of recovery, factory production remained in negative territory for the second month in a row, contracting 0.5 per cent in March due to declining output in manufacturing, especially capital goods.

Output as measured by the Index of Industrial Production (IIP) remained almost flat in 2013-14 and declined 0.1 per cent compared with an expansion of 1.1 per cent in 2012-13. The IIP showed growth of 3.5 per cent in March 2013.

IIP data for February was revised to a contraction of 1.8 per cent as against a dip of 1.9 per cent, according to information released by the Central Statistics Office (CSO).

Factory output started to decline in October, when the IIP contracted 1.2 per cent, and continued till December. It entered the positive zone in January and slipped into negative territory again in February.

Manufacturing, which constitutes over 75 per cent of the index, declined 1.2 per cent in March against growth of 4.3 per cent a year earlier.

During the April-March period of 2013-14, the sector's output contracted 0.8 per cent compared with 1.3 per cent growth previously.

Production of capital goods, a barometer of demand, shrank 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.

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.

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.

Production of 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.

The intermediate goods segment expanded 0.6 per cent compared with 2.1 per cent a year earlier. During 2013-14, growth was 3 per cent against 1.6 per cent previously.

Basic goods grew 4 per cent in March against a rise of 3.2 per cent earlier, while for 2013-14 growth was 2 per cent versus 2.4 per cent in 2012-13.

Power generation increased 5.4 per cent in March compared with 3.5 per cent in the same month of 2013. Power generation rose 6.1 per cent in 2013-14 against growth of 4 per cent in 2012-13.

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.

Negative IIP growth is extremely disappointing: Industry

Expressing disappointment over the factory output numbers for March, India Inc today said the new government should implement quick and bold reforms in order to boost manufacturing sector's growth.

"The outlook for the manufacturing sector, as things stand, seems to be disappointing and bleak. Weak demand and investment conditions continue to plague the sector.

"We look to the next Government and hold out strong hope that quick and bold reforms and implementation will enable a high growth path where manufacturing will play a significant role," Ficci President Sidharth Birla said in a statement.

He said that the industry is looking at announcements in new Budget and Foreign Trade Policy to boost manufacturing and investment.

"We also hope that there will be supporting steps from the Reserve Bank on the monetary policy side," Birla added.

Sharing similar views on on the IIP data, CII Director General Chandrajit Banerjee said that the negative growth of industrial production is "extremely disappointing".

"What is a matter of major concern is the low consumption and investment demand which is contributing negative growth of the manufacturing sector," Banerjee said.

He said that the negative growth of consumer durables reinforces that the sector continues to be stymied by the high interest rates prevailing in the economy.

"The weak industrial scenario should propel the new government to send out strong signals that it is committed to growth," he said, adding that top priority should be given to reviving investor sentiment by ensuring that cleared projects in the manufacturing and infrastructure sector take off on the ground.

Showing no signs of recovery, factory production remained in negative territory for the second month in a row, contracting 0.5 per cent in March due to declining output in manufacturing, especially capital goods.

Output as measured by the index of industrial production (IIP) remained almost flat in 2013-14 and declined 0.1 per cent compared with an expansion of 1.1 per cent in 2012-13. The IIP showed growth of 3.5 per cent in March 2013.