NEW DELHI, MARCH 13: The growth in the index of industrial production (IIP) fell to 1.7% in January compared with 7.5% a year ago. The growth fell because of a subdued performance by the manufacturing sector, especially capital and consumer goods. The growth was also lower on a sequential basis from 2.4% in December to 1.7% in January, according to CSO data.
Manufacturing output expanded 1.3% on a yearly basis, mining grew 3.9% and electricity generation rose 0.8% in January. Electricity had grown 7.6% in the year-ago period.
Rating agency CARE said lower growth in manufacturing was expected because of a high base effect. Besides, production was less because of a higher stock built-up from the second quarter as demand did not materialise fully in the third quarter.
CARE expects IIP growth for the year “to be around 5% from 4.4% cumulative till January. While base effect will be there, it will diminish in size as companies also expand on production to meet annual targets”.
Data showed 11 of the 23 industry groups in the manufacturing sector witnessed positive growth, with apparel, food products, and printing performing the best. However, furniture, paper products and fabricated metal products, excluding machines and equipment, declined the most.
Data on use-based classification of goods suggest growth has slowed down in capital goods and intermediate goods. Primary goods output rose 1.4% in January against a 1.2% fall in December. Capital goods output contracted 3.2% in January compared with a 12.4% rise in January 2018.
The production of infrastructure goods rose 7.9% compared with 10.1% in December. The output of intermediate goods contracted 3% in January compared with a 5.4% rise in the year-ago period.
Consumer durables output rose 1.8% compared with a 7.6% rise in January 2018. Non-consumer durables output rose 3.8% compared with a 10.7% expansion a year ago.
IIP growth during the April-January period of the current fiscal stood at 4.4% compared with 4.1% in the same period a year ago.
Economic growth slowed to a 5-quarter low of 6.6% in the October-December period. The Government estimate for the financial year ending this month has been revised down to a 5-year low of 7% from 7.2 percent.
The IIP numbers come ahead of the RBI’s monetary policy statement on April 4 and may increase the clamour for a cut in interest rates to boost economic activity. (Courtesy: TT)