IIP contracts in April by 0.8% as manufacturing slows down
FollowAfter two consecutive months of growth, factory output in India faltered in April on account of a poor showing by the manufacturing and capital goods sectors, said a report in The indian Express. Led by a 3.1 per cent contraction in manufacturing, the Index of Industrial Production (IIP) contracted 0.8 per cent in April, compared with a 0.1 per cent growth in the previous month, the data released by Central Statistics Office (CSO) showed. Factory output had expanded by 3 per cent in April last year. The dip in the manufacturing sector in April, which constitutes over 75 per cent of the index, comes after it had recorded a growth of 3.9 per cent in same month last year. Worrying still is that fact that the capital goods segment, a barometer of investment demand, contracted 24.9 per cent in April. After the latest data, the capital goods segment has now contracted for six consecutive months. Consumer durables expanded by 11.8 per cent.
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. Also, the retail inflation is hovering at 5.4 per cent and monetary transmission on the earlier rate cuts is yet to be completed by banks.
