New Delhi: India’s industrial production output contracted for the second straight month in November as manufacturing took a hit. Industrial production (IIP) contracted by 2.1 per cent in November after shrinking by 1.57 per cent in October.
“Sequential negative growth in IIP in October and November 2013 is disturbing,” said Sidharth Birla, president of Federation of Indian Chambers of Commerce and Industry (Ficci). He said that this reinforces the belief that the fall in the manufacturing growth has not yet bottomed out.
“Urgent measures and fresh thoughts are required to boost manufacturing, without which the jobs potential here will remain depressed,” said Birla.
The manufacturing sector, which constitutes 76 per cent of IIP, contracted by 3.5 per cent. Consumer durables segment contracted by 21.5 per cent in November. Even capital goods production, which is a measure of new investments, grew by 0.3 per cent in November.
“Capital goods remain a cause for concern as growth of this sector was a meager 0.3 per cent over a negative base of 8.5 percent in November 2012,” said Birla.
Industrial growth is likely to remain weak for the rest of 2013-14 due to infrastructure and input constraints, and weak domestic demand, said rating agency Crisil.
“The continued weakness in consumption demand in the economy is reflected in the dismal industrial production data as well as decline in non-oil and non-gold imports.
The steep contraction in production of consumer durables during November 2013 by 21.5 percent has weighed substantially on the overall IIP print,” said Bhupali Gursale, an economist at Angel Broking.
She said that IIP for financial year 2014 is likely to remain tepid, between 0.5 to one per cent. “In view of continuing sluggishness in growth and with food inflation expected to moderate and bring some respite from elevated headline WPI and CPI inflation prints, we expect the RBI to hold monetary policy rates during its January 28 policy review,” added Gursale.