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Industrial production in India shrinks 1.8 pct in October,RBI Guv Raghuram Rajan underlines inflation battle

Shrinking index of industrial production (IIP) shows economic recovery fragile.

Written by PTI | New Delhi | Published: December 12, 2013 6:07 pm

Industrial production entered the negative territory after three months,contracting by 1.8 per cent in October this year mainly due to poor performance of the manufacturing sector.

Factory output,as measured in terms of the Index of Industrial Production (IIP),grew by 8.4 per cent in October last year.

Meanwhile,IIP growth for September this year has been revised marginally to 1.96 per cent from the provisional estimate of 2 per cent.

IIP dipped by 1.8 per cent in June,2013.

According to data released by the government,industrial output for April-October period remained flat as compared to 1.2 per cent in the same period of 2012-13.

The manufacturing sector,which constitutes over 75 per cent of the index,declined by 2 per cent in October as against a growth of 9.9 per cent a year ago.

During April-October,the sector’s output contracted 0.3 per cent compared to a growth of 1.1 per cent in same period last year.

The mining sector,with a weight of about 14 per cent in IIP,also saw a contraction of 3.5 per cent in October as against a dip of 0.2 per cent in the same month last fiscal.

During April-October,the output shrank by 2.7 per cent as against a contraction of one per cent.

Power generation,however,posted a growth of 1.3 per cent in the month under review compared to 5.5 per cent a year ago. Expansion in power generation was at 5.3 per cent in April-October as compared to 4.7 per cent in the same period last year.

In terms of industries,10 out of 22 industry groups in the manufacturing sector have shown negative growth during the month of October.

Capital goods production,a barometer of demand,showed a growth of 2.3 per cent in October 2013 compared to 7 per cent in the same month a year ago. The segment declined by 0.2 per cent in April-October as against a sharp contraction of 11.6 per cent in the comparable period.

The consumer durables segment contracted by 12 per cent in October as against a growth of 16.7 per cent in the same month last year.

During April-October,the segment declined by 11.2 per cent compared to a growth of 5.7 per cent the same period last year.

The growth in consumer non-durables sector was 1.8 per cent in the month under review as against 11.2 per cent in October last year. During April-October,the segment’s growth was 6.7 per cent compared to 2.8 per cent in the same period last year.

Overall,the consumer goods output declined by 5.1 per cent in October compared to a growth of 13.8 per cent in the same month last year.

During April-October,the consumer goods output contracted by 1.8 per cent compared to 4.2 per cent growth in the corresponding period last year.

Intermediate goods segment expanded at a rate of 1.8 per cent in October compared to 9.6 per cent in same month last year. During April-October,the segment grew by 2.5 per cent compared to 2.3 per cent in the seven month period last year.

The basic goods segment declined by 1.6 per cent in October compared to 4.3 per cent growth in same month last year. During April-October the segment grew by 0.7 per cent as against 2.9 per cent growth in seven months period a year ago.

Raghuram Rajan: Inflation running higher than comfort

Reserve Bank of India Governor Raghuram Rajan on Thursday said the economy was weaker than the central bank would like,but added inflation was also higher than what it was comfortable with.

Rajan added the central bank would take all data into account,noting wholesale price inflation data due was due out on Monday,although he also said at one point during a media briefing that the RBI was “very uncomfortable” with the current level of inflation.

“We will analyse all data. Clearly growth is weaker than we would like,inflation is higher than we would like,” Rajan told reporters at the conclusion of the RBI’s board meeting in the eastern city of Kolkata.

“In a situation where you have high inflation and low growth you have to calibrate policy carefully,” he added. “There are some trade-offs that we have to make,” he said.

Rajan addressed reporters after data earlier showed sharply higher food prices drove India’s annual consumer price inflation to a higher-than-expected 11.24 percent in November from 10.17 percent in October.

IIP Industrial production contracts by 1.8 per cent in Oct

(Reuters) India’s index of industrial production (IIP) contracted for the first time in four months in October in a sign that economic recovery remains fragile,government data showed on Thursday.

Industrial output slumped 1.8 percent in October after growing 2 percent in September. Analysts polled had predicted industrial output would contract by 1.2 percent for the month.

The manufacturing sector,which constitutes about 76 percent of industrial production,contracted 2 percent from a year earlier,the federal statistics ministry said.

Capital goods production,a barometer for investments in the economy,grew 2.3 percent in October from a year earlier.

Industrial activity was hit as the infrastructure output ,which includes coal,electricity,cement,crude oil and steel factories contracted.

Output in those industries,which account for more than one-third of overall factory production,fell 0.6 percent annually compared with a reading of 8 percent in September,data released earlier showed.

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