Recovery hopes recede as IIP growth plunges to over 4-year low at (-) 3.2% in November

New Delhi: Dashing hopes of recovery, industrial production contracted by 3.2 percent in November -- the lowest level in over four years -- due to poor performance of manufacturing sector and a sharp decline in capital goods output.

The Index of Industrial Production (IPP) measuring factory output, grew at 5.2 percent in November, 2014, as per the data released by the Central Statistics Office (CSO) Tuesday.

This is the worst performance since October 2011 when IIP had contracted by 4.7 percent.

The industrial production growth in October was slightly revised upwards to 9.9 percent from provisional estimates of 9.8 percent released last month.

The manufacturing sector, which constitutes over 75 percent of the index, contracted by 4.4 percent as against a growth of 4.7 percent in the same month last year.

Seventeen out of 22 industry groups in the manufacturing segment showed negative growth during November 2015 compared to the corresponding month of the previous year.

Capital goods output, which is a barometer of investment, contracted by 24.4 percent in November 2015 compared to a growth of 7 percent in same month of previous year.

The electricity sector, which constitutes about 10 percent of the index, also showed dismal performance as it grew by meagre 0.7 percent in November 2015 compared to 10 percent growth in same month a year ago.

The mining sector output grew by 2.3 percent in November 2015 against 4 percent growth in the same month a year ago.

Overall consumer goods production grew at 1.3 percent in November 2015 against contraction of 1.6 percent in same month of 2014.

Production of consumer durables goods grew by 12.5 percent in November 2015 as against a contraction of 14.5 percent in the same month a year ago.

Consumer non-durable goods' output declined 4.7 percent in November 2015 compared to 7 percent growth in same month a year ago.

"The negative growth of General Index further worsens the prevailing levels of demand-supply imbalances in the country.

The significant shrinkage in the production of capital goods and consumer non-durables shows that industrial revival is
going to be one of the major challenges in days to come," Assocham Secretary General D S Rawat said.

PHD Chambers of Commerce and Industry President Mahesh Gupta said, "Going ahead, efforts should be taken to enhance disposable income of households vis-a-vis simplification of taxation system and enhanced tax incentives to individuals and reduction in the interest rate scenario."

In the April-November period, the industrial production grew at 3.9 percent against 2.5 percent growth in the same period of previous year.

The mining output grew at 2.1 percent compared to 2.5 percent growth in the corresponding period in 2014-15.

Overall consumer goods production grew by 4.1 percent compared a contraction of 5.7 percent.

During April-November the consumer durables growth works out to be 11.9 percent compared to a decline of 15.9 percent in the eight months period in 2014.