Weighed down by a major decline in the manufacturing sector, India’s industrial output, measured in Index of Industrial Production (IIP), shrunk by 0.3 per cent in December after a rebound of 1.8 per cent in November. The country’s factory production growth contracted in three of the last four months, indicating a persistent structural slowdown in the economy. The latest contraction, however, was much lower than the 4.3 per cent decline in September, which was the steepest fall in the last eight years.
Adding to the woes, India’s retail inflation based on Consumer Price Index (CPI) also rose for the sixth straight month in January, spiking to 7.59 per cent from 7.35 per cent in December.
The numbers came a day after Finance Minister Nirmala Sitharaman said the economy was not in trouble and green shoots were visible with the country moving towards a $5 trillion economy.
“There are seven important indicators which show that there are green shoots in the economy…economy is not in trouble,” Nirmala Sitharaman said while replying to a debate on the Union Budget in the Lok Sabha on Tuesday.
As per the data released by the Ministry of Statistics & Programme Implementation on Wednesday, the index of industrial production decelerated to 0.5 per cent during April-December period of the current fiscal, from 4.7 per cent growth in the same period of last fiscal.
The data showed that manufacturing sector output shrunk by 1.2 per cent as against a growth of 2.9 per cent in the same month a year ago. In a similar trend, electricity generation also fell 0.1 per cent compared to a growth of 4.5 per cent in December 2018.
Bucking the trend, mining sector output grew by 5.4 per cent, compared to a contraction of 1 per cent in the year-ago period.
“In terms of industries, sixteen out of the twenty three industry groups in the manufacturing sector have shown negative growth during the month of December 2019 as compared to the corresponding month of the previous year,” the data highlighted.
As per the data, the industry group ‘manufacture of computer, electronic and optical products’ has shown the highest negative growth of 24.9 percent followed by 20.3 per cent in ‘Manufacture of machinery and equipment’ and 15.5 per cent in ‘printing and reproduction of recorded media’.
On the other hand, the industry group ‘manufacture of basic metals’ has shown the highest positive growth of 14.2 per cent followed by 13.2 per cent in ‘manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ and 5.9 per cent in ‘manufacture of leather and related products’.