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Factory output of India shrinks 4.3% in September; lowest in almost 8 years
Nov-12-2019

Highlighting the persistent structural slowdown in the economy, India's factory output growth, measured by the Index of Industrial Production (IIP), contracted by 4.3% in September as compared to a contraction 1.1% in August 2019 as all three broad-based sectors of capital goods production, consumer durables, and infrastructure and construction goods contracted. This was a second straight month of contraction, after a decline of 1.1% in August 2019. In September 2018, India's factory output had expanded 4.6%. The factory output shrank to the lowest level in eight years in this series, which began April 2012 (with 2011-12 as the base year) and the lowest since October 2011 when compared with the earlier series with base year 2004-05. IIP had contracted 5% in October 2011.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of September stood at 123.3, which was 4.3% lower as compared to the level in the month of September 2018. The cumulative growth for the period April-September 2019 over the corresponding period of the previous year stood at 1.3%.

On the sectroal front, the manufacturing sector, which contributes over 77% to the IIP, witnessed slowdown as it declined by 3.9% in September as compared to 4.8% growth a year ago. The power generation sector output dipped 2.6% in September, compared to 8.2% rise a year ago. Mining output too fell by 8.5% in September as against 0.1% climb in the corresponding month last fiscal. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of September stood at 86.5, 126.5 and 158.7 respectively. The cumulative growth in these three sectors during April-September 2019 over the corresponding period of 2018 has been 1.0%, 1.0% and 3.8%, respectively.

Capital goods production, which is a barometer of investment, declined by 20.7% in September compared to a 6.9% hike in the year-ago month. As per Use-based classification, the growth rates in September 2019 over September 2018 were (-) 5.1% in primary goods, 7% in intermediate goods and (-) 6.4% in infrastructure/ construction goods. Consumer durables and consumer non-durables have recorded growth of (-) 9.9% and (-) 0.4%, respectively.

In terms of industries, 17 out of the 23 industry groups in the manufacturing sector have shown negative growth during the month of September 2019 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of motor vehicles, trailers and semitrailers’ has shown the highest negative growth of (-) 24.8% followed by (-) 23.6% in ‘Manufacture of furniture’ and (-) 22.0% in ‘Manufacture of fabricated metal products, except machinery and equipment’. On the other hand, the industry group ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ has shown the highest positive growth of 15.5% followed by 9.2% in ‘Manufacture of basic metals’.
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