Industry pushes for demand revival measures as IIP grows 0.7%

As industrial production grew by just 0.7 per cent in September, the industry today urged the government to initiate measures aimed at revival of domestic demand and create a conducive environment for investments.
Senior Economist at ICRA, Aditi Nayar, said that cash purchases are likely to be temporarily disrupted from mid-November 2016 onwards following the withdrawal of legal tender status of Rs 500 and Rs 1,000 notes, which would curb consumption in the immediate term, and therefore have a knock-on impact on production of consumer goods.
However, she said, the performance of IIP in October is likely to benefit from continued inventory accumulation prior to the festive season on the back of improved rural and urban consumption.

Industrial production grew 0.7 per cent in September hit by poor performance of manufacturing and mining sectors coupled with a decline in the capital goods output.
The factory output for the April-September period of the current financial year declined by 0.1 per cent compared to 4 per cent growth in the year-ago period, as per the data released by Central Statistics Office.
"There is a need for creating conducive environment for investments, capacity utilisation and augmentation of industrial production on a priority basis. The Centre should initiate more effective short term revival measures for growth momentum to be maintained," Assocham President Sunil Kanoria said.

He said policymakers should concentrate on reviving the domestic demand as global growth including exports and industrial activity are likely to remain weak, uneven and might struggle to gain traction.

Factory output, as measured in terms of the Index of Industrial Production (IIP), had grown by 3.7 per cent in September last year.
The manufacturing sector, which constitutes over 75 per cent of the IIP index, recorded a low growth of 0.9 per cent in September compared to 2.7 per cent growth a year ago.
Production of capital goods, which are considered as barometer for investment, declined by 21.4 per cent in the six-month period compared to a growth of 7.8 per cent in year ago period.