India's industrial production posts steepest fall in 8 yrs

In signs of continuing weakness in the economy, India's factory output shrank to the lowest level in eight years as all three broad-based sectors of capital goods production, consumer durables, and infrastructure and construction goods contracted.

The Index of Industrial Production (IIP) fell 4.3 per cent in September as compared to a contraction by 1.4 per cent in August 2019 and a growth of 4.6 per cent in factory output in the same month a year back, data released by the Ministry of Statistics showed on Monday.

The second straight month of contraction has taken the IIP to its lowest level since it shrank by 5 per cent in October 2011.

On a quarterly basis, the second quarter of 2019-20 fiscal (July-September) saw IIP contracting by 0.4 per cent (Q1 3 per cent expansion and 5.3 per cent growth in Q2 FY19).

In September 2019, capital goods output dropped 20.7 per cent from a year ago, while consumer durables fell 9.9 per cent. Infrastructure and construction goods output fell 6.4 per cent. Intermediate goods was the only use-based classification that grew 7 per cent in September.

The contraction in IIP in September has dampened prospects of a quick recovery in economic growth after it slipped to a six-year low of 5 per cent in the April-June quarter this year.

Gross Domestic Product (GDP) data for July-September is due on November 29.

"IIP has been very volatile and the small momentum of a couple of months fizzles out soon," said Devendra Kumar Pant, Chief Economist at India Ratings & Research. "The Indian economy is presently facing a structural growth slowdown originating from declining household savings rate, and low agricultural growth."