IIP data show revival a major challenge: India Inc

india-industry-reuters Industrial output contracted by 0.8 per cent in April | Reuters

Disappointed over the latest IIP data, India Inc on Friday said industrial revival is going to be a major challenge going ahead but expressed hope that the growth will pick up on account of the recent measures taken by the government.

"The negative growth of general index further worsens the prevailing levels of demand-supply imbalances in the country. The significant shrinkage in production of capital goods and consumer non-durables shows that industrial revival is going to be one of the major challenges in days to come," Assocham Secretary General D S Rawat said.

"The growth in manufacturing may take some more time to pick up as the measures taken by the government in the last few months start yielding results," Ficci President Harshavardhan Neotia said.

Industrial output contracted by 0.8 per cent in April, the first decline in three months, due to drastic fall in capital goods production and manufacturing activities, prompting demands for pro-active measures by government to boost demand.

Factory output measured in terms of the Index of Industrial Production (IIP) had expanded by 3 per cent in April last year, the data released by Central Statistics Office (CSO) today showed.

The IIP had registered a growth of about 2 per cent in February this year. The provisional estimates of 0.1 per cent growth in March this year was revised slightly upwards to 0.3 per cent. The IIP declined by 1.6 per cent this January.

"The 0.8 per cent contraction in industrial output in April 2016 is inferior to our expectation of a mild growth in that month. The volume-based contraction in manufacturing output in five of the last six months is disheartening," Aditi Nayar, Senior Economist at ICRA, said.

CARE Ratings said the industrial production in FY2016-17 is expected to pick up in coming months on the back of improved infrastructure spending by the government and improvement in the consumer goods segment.

The manufacturing sector which constitutes over 75 per cent of the index, contracted by 3.1 per cent in April this year compared to a growth of 3.9 per cent in same month last year.

Similarly the capital goods output, which is a barometer of investment, declined sharply by 24.9 per cent in April compared to a growth of 5.5 per cent during the same month last year.

"The deep contraction in capital goods highlights that investment activity by the private sector remains feeble," Nayar said.

Overall, 9 of the 22 industry groups in manufacturing sector showed negative growth in April 2016 as compared to year ago period.

This browser settings will not support to add bookmarks programmatically. Please press Ctrl+D or change settings to bookmark this page.
Topics : #economy

Related Reading

    Show more