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Last Updated : May 10, 2019 08:53 PM IST | Source: Moneycontrol.com

India's industrial output in March contracts 0.1%

The finance ministry in its Monthly Economic Report for March released earlier this month said the slowdown in economic activity in 2018-19 is because of declining growth of private consumption, tepid increase in fixed investment, and muted exports.

Moneycontrol News @moneycontrolcom

India’s industrial output contracted 0.1 percent month-on-month (MoM) in March, according to the Index of Industrial Production (IIP) data released by the government on May 10, indicating a probable slowdown in the economy.

The cumulative growth for the period April-March 2018-19 over the corresponding period of the previous year is seen at 3.6 percent.

Industrial output, or factory output, is the closest approximation for measuring economic activity in the country's business landscape.

The finance ministry in its Monthly Economic Report for March released earlier this month said the slowdown in economic activity in 2018-19 is because of declining growth of private consumption, tepid increase in fixed investment, and muted exports.

Manufacturing output, which accounts for more than three-fourths of the entire index, fell 0.4 percent in March, against a robust 5.7 percent growth in the same period a year ago. Mining grew at 0.8 percent in March against a 3.1 percent growth in March 2017-18. Electricity production grew 2.2 percent in March against 5.9 percent in the same period a year ago.

Of the other high-frequency indicators, data released by the Society of Indian Automobile Manufacturers (SIAM) last month signaled a slowdown in urban demand as car sales grew 2.7 percent in 2018-19, the worst performance in five financial years.

“The figures are lower than anticipated, but in line with the other indicators, which is showcasing that there are signs of slowdown in the economy. So we need to be a little watchful of that. Maybe it’s a pre-election phenomenon. Whether it’ll last a little long needs to be seen,” said Tushar Arora, senior economist, HDFC Bank said.

Capital goods output, which is a proxy to measure private sector investment activity, fell 8.7 percent in March.

Primary goods grew at 2.5 percent in March, a fall from a growth of 3 percent in the same period a year ago. Intermediate goods contracted 2.5 percent from a growth of 2.5 percent a year ago.

“Declining growth of primary goods and deepening contraction of intermediate goods, and weakness in both investment and consumption activities suggests very fragile industrial activities in near term,” said Devendra Kumar Pant, chief economist and senior director, India Ratings and Research.

Consumer durables contracted 5.1 percent MoM, as compared to a 1.2 percent MoM growth seen in February. The consumer non-durables sector saw a growth of 0.3 percent MoM, as compared to 4.3 percent MoM growth seen in February.

Infrastructure output, which comprises eight sectors - such as coal, crude oil and electricity - accounts for nearly 40 percent of India's industrial output.
First Published on May 10, 2019 05:35 pm
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