After registering an impressive 9.8 per cent growth in October, industrial production contracted for the first time in 13 months, recording -3.2 per cent in November, even as retail inflation inched up in December for the fifth month in a row, at 5.61 per cent on rising food prices.
The ministry of statistics and programme implementation released two separate set of data — index of industrial production (IIP) and consumer price index (CPI) — both likely to cause worry to the government amid lack of private investment and declining manufacturing.
According to the data, manufacturing saw a year-on-year contraction of 4.4 per cent in November as against an expansion of 10.6 per cent in October. Similarly, mining saw a growth of 2.3 per cent year-on-year as against a growth of 4.7 per cent a month ago while electricity generation inched up a meagre 0.7 per cent year-on-year compared to 9 per cent growth in October. Capital goods production declined 24.4 per cent as against a growth of 16.1 per cent during the previous month.
Meanwhile, finance ministry attributed the decline to statistical reasons. “This number is effected by two factors. One is Diwali in November and as a result, there were fewer working days. And also, some impact of Chennai floods was also present,” CEA Arvind Subramanian said.
Retail inflation, as measured by the CPI rose 5.61 per cent in December as against 5.41 per cent in the previous month with food inflation rising to 6.40 per cent during the period as against 6.07 per cent in November. The increase in food inflation came mainly on account of expensive vegetables and cereals, along with those of protein-rich items.
Experts said the twin development will make it difficult for the RBI to lower rate next month.
“The fall in the manufacturing is because both the export and domestic demand. It also underlines the need for measures to stimulate investments ..” said Harshavardhan Neotia, president, FICCI.