Industrial production shrinks 0.8% in April

Manufacturing output alone also recovered, rising 1.3 percent in the month after a 1 percent downturn in March.

Early estimates of the index of industrial production (IIP) shows it declined 0.84% in the first month of the new financial year as manufacturing sector output shrank 3.13%, the fifth time in the last six months.

Meanwhile, while the mining sector index grew 1.4%, the electricity output index rose by a spiffy 14.6% in April.

As per the IIP, capital goods output, a barometer of investment, declined sharply by 24.9% in April as against a growth of 5.5% in the same month previous year.

Overall, 9 of the 22 industry groups in manufacturing sector showed negative growth in April 2016 as compared to year ago period.

Moreover, the statistical office announced that manufacturing sales value dropped 1.2 percent yearly to MYR 52.3 billion in April from MYR 52.9 billion in the same month of 2015.

With the fresh IIP numbers painting a gloomy picture of the economy, it is unlikely that the Reserve Bank of India would go for a policy rate cut in the coming months.

Upturn in cargo traffic at major ports, pick-up in automobile sales especially two-wheelers and three-wheelers, commercial vehicle sales, passenger air and freight traffic, cement production and steel consumption are expected to facilitate a consumption-led economic recovery in 2016-17.

The IIP data showed lower demand as overall consumer goods output dipped by 1.2 per cent in April as against a growth of 2.8 per cent year ago.

India’s FY16 GDP growth accelerated to 7.6 per cent after printing at 7.2 per cent in FY15 following a raft of fiscal and monetary steps.

The food industry stemmed its decline in output, which dropped by 0.5 percent after a 1.0-percent fall in March. “The improvement in the growth of consumer durables on a sequential basis in April 2016, despite an unfavourable base effect, stood out as the key positive trend amongst the use-based industries”, she said.

The March figure was boosted exclusively by electricity generation, which rose by 11 per cent from the 9.6 per cent rise seen in February.

Items which showed high positive growth include “Aviation Turbine Fuel” (102.5%), “Leather Garments” (40.1%), “Gems and Jewellery” (34.4%), “Telephone Instruments including Mobile Phone and Accessories” (30.1%), “H R Sheets” (29.6%), “Aerated Waters & Soft Drinks” (28.2%), “Petrol” (27.7%), “Aluminium wires & extrusions” (26.4%) and “Scooters and Mopeds” (24.4%).