India's industrial output shrinks in April

NEW DELHI (Reuters) - India's industrial output unexpectedly fell in April, its first contraction in three months, dragged down by a sharp plunge in production of capital goods and a contraction in consumer wares.

Production at factories, mines and utilities shrank 0.8 percent from a year earlier, government data showed on Friday. The fall compared with a 0.5 percent annual rise predicted by economists surveyed by Reuters and a revised 0.3 percent year-on-year growth in March.

Capital goods output plunged about 25 percent on year in April. The sector, a proxy for capital investments, has been falling since October.

Consumer goods, meanwhile, were hit by a 9.7 percent annual contraction in production of non-durables items.

Industrial output figures have paled in significance since last year, when New Delhi revamped the method it uses to calculate gross domestic product.

The new method takes into account gross value addition in goods and services, a departure from the old practice that factored in volume-based indicators such as industrial output.

That helps to explain why India's economy grew 7.6 percent from a year earlier in the fiscal year to end-March despite the sluggish pace of expansion in industrial production, which posted annual growth of 2.4 percent in 2015/16.

The federal statistics office plans to revise and rebase the industrial production index in the next six months to better capture the changes taking place in the economy.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine)