Manufacturing decline pulls factory output down

Posted April 13, 2017

Industrial output fell mainly on account of a decline in the manufacturing sector, and lower offtake of capital and consumer goods. Even though, the rate of price rise for overall food category was lower at 1.93% than 2.01% recorded in February.

India's industrial production declined unexpectedly in February on weak manufacturing activity, figures from the Central Statistics Office revealed Wednesday.

"The cumulative growth for the period April-February 2016-17 over the corresponding period of the previous year stands at 0.4 per cent", said an official statement.

Food and beverage inflation was marginally higher at 2.54% in March against 2.46% in February.

Growth remains fragile in manufacturing and needs continued efforts to make the sector competitive, the Federation of Indian Chambers of Commerce and Industry (Ficci) said in a release.

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Amongst use-based classification, basic goods grew 2.4 per cent in February this year, against 5.25 per cent in January. January's output numbers were revised down to 0.3 per cent month-on-month from an initially reported 0.9 per cent.

India Inc today pitched for more reforms to create a conducive environment for investments and boost manufacturing as industrial output shrank 1.2 per cent to a four-month low in February.

Energy output rose slightly over the year while there were solid gains for capital goods, intermediate goods and durable consumer goods.

Meanwhile, retail inflation rose marginally to 3.81 per cent in March from 3.55 per cent in February 2017.

There was no significant market reaction to the data and there will be no immediate policy implications. The rate of price rise in fuel and light was at 5.56%. The future trajectory (initial months of FY18) of CPI inflation will largely depend upon how vegetable prices will pan out (which are now in negative territory due to seasonal factors), as inflation excluding food and fuel remaining sticky.