Double whammy for India's economy: Industrial output contracts 1.2% in February; inflation rises to 3.81% in March

New Delhi: India's industrial production contracted by 1.2 percent in February due to poor performance of manufacturing sector coupled with decrease in output of capital goods, as per data released by Central Statistics Office (CSO).

Factory output measured in terms of Index of Industrial Production (IIP) was 1.9 percent in February last year.

On the other hand, retail inflation jumped to a five-month high of 3.81 percent in March on costlier protein items, edible oils and non-food products like fuel and light.

Inflation based on Consumer Price Index (CPI) was at 3.65 percent in February. It had dipped to a multi-year low of 3.17 percent in January this year on account of cash crunch following demonetisation.

It was 4.83 percent in same month a year ago.

The cumulative IIP growth for the period April-February period of the current financial year over the corresponding period of the previous year stood at 0.4 percent, as per the data released by Central Statistics Office Friday.

The manufacturing sector, which accounts for over 75 percent of the index, contracted by 2 percent in February against a rise of 0.6 percent in same month a year ago.

Capital goods segment, which is a barometer of investment, contracted by 3.4 percent in February as against a contraction of 9.3 percent year ago.

Mining sector output however rose by 3.3 percent in February compared to 5 percent a year ago.