Industrial output sluggish in December, grows at 1.8 percent

Pulled down by negative capital goods production, India’s industrial output in December grew at a snail’s pace at 1.8 percent, underlining the slowdown in the economy and putting pressure on policymakers to take steps to stem the fall.

In the previous month, the index of industrial production (IIP) — a barometer of factory production — had risen by 5.9 percent raising hopes of an end to the economic slowdown.

But Thursday’s data brought back the focus on the fragile state of the economy. It will also put pressure on the Reserve Bank of India to start lowering interest rates earlier than it may want to.

According to data released by the Ministry of Statistics and Programme Implementation, capital goods production fell by a whopping 16.5 percent.

Manufacturing, which is a major constituent of the IIP, expanded by just 1.8 percent in December, while the mining sector’s output declined by 3.7 percent. Electricity generation was, however, robust at 9.1 percent.

However, the chairman of the Prime Minister’s Economic Advisory Council, C. Rangarajan was optimistic of a revival in the rest of the current fiscal.

“I believe that in the month of January, February and March, there could be a revival,” said Rangarajan.