IIP contracts 1.2% in Feb on weakness in consumer and capital goods

Fall in consumer and capital goods production is the reason; Jan IIP revised to 3.3%

Industrial output contracted 1.2% in February from a year earlier, driven down by a contraction in consumer and capital goods production, government data showed on Wednesday.

The factory output, measured in terms of Index of Industrial Production (IIP), had expanded by a revised 3.3% in January mainly due to a bounce-back in figures in the consumer and capital goods sectors. Industrial output had contracted 0.1% in December on account of cash crunch following demonetisation of high value currency notes.

Manufacturing, which constitutes three-fourth of the index fell by 2% as compared to the 2.3% rise in January. However, electricity generation was up by 0.3% as against a 3.9% rise in January. Similarly, the mining sector also maintained the growth trend, going up by 5% in February as compared to 5.3% rise in the previous month.

Similar to the main index, capital goods also fell by 3.4%. The segment had grown by 10.7% in January after a fall of 3 % in December. The sector is highly volatile in the IIP.

The cumulative growth of the country's factory output for the April-February of  2016-17 period was 0.4%, much lower as compared to the cumulative growth of 2.6% during the corresponding period of the 2015-16.