March factory output slips to 21-month low

Growth of India's factory output

New Delhi, May 10 (IANS) India’s factory production shrunk in March 2019 by (-)0.1 per cent, the first contraction after June 2017, from a growth of 5.3 per cent reported for the corresponding month of 2018, official data showed on Friday.

Even on a month-on-month basis, the Index of Industrial Production (IIP) was lower than the 0.1 per cent rise recorded during February 2019.

For FY 2018-19, the IIP grew at 3.6 per cent from 4.4 per cent reported for the previous fiscal.

“The Quick Estimates of IIP with base 2011-12 for the month of March 2019 stands at 140.2, which is 0.1 per cent lower as compared to the level in March 2018,” the Ministry of Statistics and Programme Implementation said.

“The cumulative growth for the period April-March 2018-19 over the corresponding period of the previous year stands at 3.6 per cent.”

As per the data, the output rate of the manufacturing sector fell (-)0.4 per cent in March from a year-on-year (YoY) rise of 5.7 per cent.

On a YoY basis, mining production inched up by 0.8 per cent from a rise of 3.1 per cent and the sub-index of electricity generation was higher by 2.2 per cent from 5.9 per cent.

Among the six use-based classification groups, the output of primary goods, which has the highest weightage of 34.04, grew by 2.5 per cent. The output of intermediate goods, which has the second highest weightage, fell by (-)2.5 per cent.

Similarly, output of consumer non-durables inched up by 0.3 per cent and that of consumer durables fell by (-)5.1 per cent.

In addition, output of infrastructure or construction goods increased by 6.4 per cent, but that of capital goods fell by (-)8.7 per cent.

In terms of industries, 12 out of the 23 industry groups in the manufacturing sector have shown negative growth during the month under review as compared to the corresponding month of the previous year.

“The industry group ‘Manufacture of furniture’ has shown the highest negative growth of (-)24.6 per cent, followed by (-)18.5 per cent in ‘Manufacture of other transport equipment’ and (-)15.3 in ‘Manufacture of fabricated metal products, except machinery and equipment’,” the statement said.

“On the other hand, the industry group ‘Manufacture of tobacco products’ has shown the highest positive growth of 13.5 per cent followed by 10.6 per cent in ‘Manufacture of computer, electronic and optical products’ and 9.3 per cent in ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’,” it said.

According to Devendra Pant, Chief Economist, India Ratings and Research, “On yearly basis, FY19 IIP growth at 3.6 per cent has been the lowest in last three years and its trajectory mirrors the trajectory of GDP growth. FY19 IIP growth was supported by infrastructure or construction goods and consumer durables.

“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 the near-term.”

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