Industrial output growth fell to a five-month low of 4.4 per cent in March due to decline in capital goods production and deceleration in mining activity and power generation, according to the official data.
Industrial growth measured by the Index of Industrial Production (IIP) in 2017-18 too decelerated to 4.3 per cent from 4.6 per cent in the previous fiscal.
The IIP grew by 4.4 per cent in March 2017, the same as in March this year, the data released by the Central Statistics Office (CSO) showed today.
The previous low at 1.8 per cent was recorded in October 2017. Industrial production had expanded 7.1 per cent in February this year on manufacturing boost.
The manufacturing sector, which constitutes over 77 per cent of the index, grew at 4.4 per cent in March against 3.3 per cent in the same month a year ago.
The mining sector growth decelerated to 2.8 per cent during the month from 10.1 per cent in March 2017. Power generation too slowed down to 5.9 per cent as against 6.2 per cent in March 2017.
Capital goods output declined by 1.8 per cent during March against an expansion of 9.4 per cent in the corresponding period last year.
"With an unfavourable base effect, the capital goods sector displayed a YoY contraction of 1.8 per cent in March 2018, the worst performance in nine months, despite the healthy growth displayed by commercial vehicles," ICRA's Principal Economist Aditi Nayar said.
"Nevertheless, the sustained contraction recorded from April 2017 to July 2017, suggests that capital goods may revert to displaying modest growth in the next few months."
According to industry body Assocham, the IIP data for March throws a disconcerting fact about lack of appetite for investment, amplified by negative growth in the capital goods.
"The over-hang of high leverage in the industry as also squeezed balance sheets of the banks are visible from the IIP data,"Assocham secretary general D S Rawat.
The data, on the other hand revealed that the consumer durables output showed an increase of 2.9 per cent as against decline of 0.6 per cent in March 2017.
The consumer non-durables segment showed an impressive growth of 10.9 per cent in March as against 7.5 per cent in corresponding month last year.
During 2017-18, the manufacturing sector recorded a growth of 4.5 per cent, marginally up from 4.4 per cent in 2016-17.
The mining sector as well as power generation reported deceleration to 2.3 per cent and 4.6 per cent from 5.3 per cent and 5.4 per cent respectively in 2016-17.
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