New Delhi: With industrial production contracting to four-month low of 0.4 percent in December, India Inc on Friday said jobs may be imperiled if the trend continues.


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"The performance of the index reflects depressed investment outlook for the industry and any such slowdown continuing for a longer period of time would have serious implications on the employment front," Ficci Secretary General A Didar Singh said.


"Improving business environment, reducing interest rates and implementation of GST should be the priority for the Government," he said.


Singh further said that announcements made in the Union Budget 2017-18 and their quick implementation especially on the capital formation has the potential to generate additional growth.


Principal Economist at ICRA Aditi Nayar said: "The contraction recorded by the IIP in five out of the nine months of this fiscal highlights the weakness in the industrial sector."


Demonetisation took a toll on industrial activity as output contracted to four-month low of 0.4 percent last December with consumer durables taking the worst hit, plummeting by over 10 percent due to cash crunch.


The factory output had contracted 0.9 percent in December 2015.


The latest decline reflected deterioration in the manufacturing sector on account of cash crunch following the scrapping of the Rs 500/1000 notes on November 8, 2016. The industrial output was 5.7 percent in November and did not capture the impact of demonetisation.


Finance Minister Arun Jaitley said the contraction in industrial production in December was due to fallout of demonetisation but expected a pick-up and greater expansion in the coming months.


Factory output measured in terms of Index of Industrial Production (IIP) in December declined on account of 2 percent contraction in manufacturing sector, as against 1.9 percent decline a year ago.


According to data released by the Central Statistics Office today, the previous low was a contraction of 0.7 percent in August.


During the April-December period of the current fiscal, IIP growth remained almost flat at 0.3 percent compared to 3.2 percent growth in the nine month period of 2015-16.


Output of consumer durables segment - TVs, refrigerators and washing machines - declined by 10.3 percent during the month under review from robust growth of 16.6 percent reflecting the impact of currency crunch.