Industrial output again fell in March

FY14 growth in sector at 9-year low

Pulled down by falls in mining and manufacturing output, industrial production declined in March (the end of the financial year) for a second month, by 0.5 per cent against a decrease of 1.7 per cent in the previous month.

With this, industrial output shrank to a nine-year low of 0.1 per cent in 2013-14, against a growth of 1.1 per cent in the previous year, official data showed on Monday. Industrial output declined in half the months during 2013-14. Before this, the Index of Industrial Production (IIP) contracted sharper, by 4.7 per cent, only in 2004-05. However, during that period the IIP was calculated taking 1993-94 as the base year against 2004-05 as is the practice now.

Mining and manufacturing output fell in March by 1.2 and 0.4 per cent, respectively, while electricity generation rose 5.4 per cent, according to the data issued by the ministry of statistics and programme implementation.

For 2013-14, manufacturing and mining declined 0.8 per cent each, while electricity generation rose 6.1 per cent. In the previous year, mining had fallen by 2.3 per cent, while manufacturing had increased 1.3 per cent and electricity by four per cent. “This does not come as a surprise. Industry has been suffering due to a poor policy environment. Coupled with this, consumption demand has taken a plunge, a reflection of poor income opportunities. This will take some time to be revived. There is no recovery in sight that is going to be decisive,” said D K Joshi, chief economist, CRISIL.

Manufacturing output has a weight of almost 75 per cent in the index. However, the sector has been mired with a series of problems due to a sluggish infrastructure, a complex taxation system and spiralling inflation. All these factors have adversely impacted economic activity, dampening expansion plans and hurting investments.

In March, while consumer durable goods declined 11.8 per cent, capital goods moved down 12.5 per cent. On a yearly basis, consumer durables and capital goods declined by 12.2 per cent and 3.7 per cent, respectively, reflecting a sluggish demand for industrial activity. There was not even a single month when consumer durables rose in 2013-14. The outlook also does not seem promising in FY15, with passenger car sales down 10.15 per cent in April year-on-year.

However, consumer non-durable goods rose 7.2 per cent in March and 5.2 per cent in 2013-14.

Within the manufacturing sector, production of radio, television sets and communication equipment and apparatus registered the highest fall of 33.1 per cent, followed by 26.1 per cent in office, accounting and computing machinery, and 21.5 per cent in medical, precision and optical instruments, watches and clocks. On the other hand, the group of wearing apparel, dressing and dyeing of fur jumped 26 per cent, followed by 9.2 per cent by basic metals and 6.2 per cent by food products and beverages.