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Industrial production continued to slide in February, falling to a nine-month low, much below market expectations.
The Index of Industrial Production (IIP) for February fell 1.9 per cent, against a rise of 0.8 per cent in the previous month, data released by the Ministry of Statistics and Programme Implementation showed on Friday. For the April-February period of 2013-14, industrial output fell 0.1 per cent, compared with 0.6 per cent growth in the corresponding period of 2012-13.
In February, manufacturing, which accounts for 75 per cent of the index, saw a decline of 3.7 per cent in output, against halt in production in the previous month.
Mining saw growth for the fourth consecutive month, with output expanded 1.4 per cent, against 1.9 per cent in January. Power generation saw robust 11.5 per cent growth, against 6.5 per cent in January.
Analysts expressed apprehension about the data. “The February 2014 IIP print is weak compared to our expectations of sub-one per cent growth. The industrial performance has been dragged down by the contraction in the capital and consumer goods segments,” said Aditi Nayar, senior economist at ICRA Ratings.
Capital goods output was lacklustre, with the segment contracting 17.4 per cent in February, against a fall of 4.1 per cent decline in January.
Consumer non-durable goods contracted for the first time this year, falling 1.2 per cent, against 4.6 per cent growth in the previous month. This segment was dragged down by a fall of 21.3 per cent in garments output.
The consumer durables segment, which has been contracting through 2013-14, continued to its slide, with output falling 9.3 per cent compared with 8.3 per cent in January. This led to a 4.5 per cent decline in consumer goods output in February, against a 0.5 per cent fall in January. “High retail inflation is one of the factors contributing to a deferral of purchases of big-ticket consumer durables,” said Nayar. In February, Consumer Price Index-based inflation stood at 8.1 per cent.
Nayar said a recovery in industrial output wasn’t likely until the second half of 2014-15, adding “the overall consumer sentiment will be driven by the effects of monsoon this year”.
Industry chambers called for the government to “send out strong signals” to renew its focus on growth. “This will involve ensuring projects cleared by the Competition Commission of India and PMG are implemented on the ground. Getting sanctioned projects on the ground is the surest way to revive investment demand,” said Chandrajit Banerjee, director-general of the Confederation of Indian Industry.
