Industrial production contracts 1.9% in October against 9.9% growth same month last year

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Industrial production has sharply contracted 1.9 percent in October against 9.9 percent growth in the same month last year.
News agency ANI reported that the general Index of Industrial Production for October 2016 stood at 178.0, which is 1.9 % lower as compared to level in month of October in 2015.
Industrial production

After showing decline for two consecutive months of July (-2.5%) and August (-0.7%), factory output, as measured in terms of the Index of Industrial Production (IIP), had grown at 0.7% in September.

For the April-October period, industrial output declined by 0.3% as against a growth of 4.8% a year ago, as per the data released by Central Statistics Office (CSO) today. Factory output grew at a higher rate of 9.9% in October last year mainly driven by better performance of manufacturing sector and increase in output of capital goods by 16.5%.

The manufacturing sector, which constitutes over 75% of the IIP index, recorded a contraction 2.4% in October. Similarly the capital goods output also shrank by 25.9%. In terms of industries, 12 out of 22 groups in the manufacturing sector showed negative growth in October. The mining sector recorded a contraction of 3.1% in October as against a growth of 3.5% a year ago. Power generation recorded a growth of 1.1% in October compared to 5.3% growth in the same month a year ago.

Growth in output of consumer durables went up by just 0.2% in October compared to 41.9% growth a year ago. The output of consumer non-durable goods declined by 3% in October as against 4.8% growth a year ago. Overall, consumer goods production dipped 1.6% in October compared to 18.3% growth a year ago.

As per ‘use-based’ classification, the growth rates in October 2016 over October 2015 are 4.1% in basic goods, (-) 25.9% in capital goods and 2.9% in intermediate goods.

The news will be another blow to the Centre’s Narendra Modi government, which has been facing a grim economic prospects in the wake of the last month’s demonetisation announcement.
The RBI this week had lowered the growth forecast from 7.9% to 7.1% following the likely impact of the note ban.
(With PTI inputs)

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