India's factory output falls to 1.7% in May from 3.1% in April

A worker uses a gas cutter at a metal workshop in an industrial area in Mumbai, India, February 10, 2017. REUTERS/Danish Siddiqui - RTX30FXQ

India’s factory output witnessed a tepid growth of 1.7 percent in May from 3.1 percent in April, mainly due to subdued mining and manufacturing output.

Factory output measured by the index of industrial production (IIP) is the closest approximation for measuring economic activity in the country’s business landscape.

In May, the government announced a new series, shifting the base year to 2011-12 from 2004-05, changing the weights and adding new items to reflect current consumption patterns. The change in baseline for the IIP, made by the Central Statistics Office (CSO) last month was much needed, in order to map economic activities more accurately and project realistic data.

In the new series, manufacturing sector’s weightage has been increased to 77.6 percent from 75.5 percent, with electricity's share in the index witnessing a decline to 7.9 percent from 10.3 percent. The data also included renewable energy sources. Infrastructure or construction goods were the new addition in the index, with a substantial rise in the number of consumer durables and non-durables.

Manufacturing sector’s growth continued to remain lukewarm, with a growth of 1.2 percent in May, compared with 2.6 percent in April and 8.6 percent in the same period last year.

Infrastructure or construction goods’ growth was flat at 0.1 percent in June as compared with a robust 7.4 percent jump last year. Similarly, consumer non-durables jumped 8.3 percent in April from a near-flat growth of 0.1 percent last year.

Consumer durables continued to witness a negative growth at (-) 4.5 percent in May, compared with 7.4 percent jump during the same period last year and a (-) 6.0 percent fall in April.

Mining production also declined to (-)0.9 percent in May from 4.2 percent in April and 5.7 percent a year ago.