Manufacturing sector output, which accounts for more than three-fourths of the entire index, contracted to 0.3 percent in February from 1.3 percent.
India's retail inflation stood at 2.86 percent in March, higher than previous month's 2.57 percent, on account of increase in prices of food articles and fuel.
The latest price data released by the Central Statistics Office on April 12 showed that consumer price index (CPI)-based inflation, which measures changes in shop-end prices, remained comfortably within the Reserve Bank of India's target level of 4 percent.
Food prices continued to fall with consumer food price inflation, which is a gauge to measure changes in kitchen budgets, grew 0.66 percent in March.
The headline retail inflation rate, which the RBI tracks for interest rate decisions, is currently above the RBI's lower tolerable limit of 2 percent.
Inflation in major food items showed a contraction in March. Fruit inflation contracted 5.88 percent, vegetables contracted 1.49 percent and pulses and products contracted 2.25 percent.
Rate of inflation in the housing sector stood at 4.93 percent and that in fuel and light was at 2.42 percent for March.
The country's factory output was seen at 0.1 percent in February, lower than previous month's 1.7 percent, and 4.3 percent in February last year, on account of slowdown in the manufacturing sector.
Factory output measured by the index of industrial production is the closest approximation to gauge business activity in the economy.
Manufacturing sector output, which accounts for more than three-fourths of the entire index, contracted 0.3 percent in February, a sharp fall from an 8.4 percent growth a year ago for the same period, symptomatic of a slowdown in investment activities.
Electricity production growth stood at 1.2 percent for the month of February whereas mining activity, which accounts for over 14 percent of the entire index, stood at 2.0 percent.
Consumer durables output grew at 1.2 percent in February as against a robust 7.5 percent year ago for the same period, signifying sluggish sales.
Capital goods output contracted -8.8 percent in February from a 16.6 percent growth year ago for the same period which mirrors a slowdown in production activities and a decrease in capacity building.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.