New Delhi, Feb. 12: A weak consumer demand pulled industrial production down for the second straight month in December, keeping up pressure on the government to speed up measures to revive investment.
The index of industrial production (IIP) fell 0.6 per cent annually in December, hurt mainly by a contraction in manufacturing output, which has a 75.5 per cent weightage and contributes about 15 per cent to overall gross domestic product (GDP).
Data released by the Central Statistical Office showed that manufacturing output fell 0.7 per cent in December from a year earlier. The mining output contracted 4 per cent while capital goods output declined 0.9 per cent in December.
Industrial output has contracted in six of this fiscal's first nine months through December, underscoring the severe slowdown the economy is facing.
Economists partly blame the central bank’s aggressive monetary stance over the past few years for the weak industrial activity as it made fundraising by companies extremely costly.
The government’s slow response to addressing infrastructure deficiencies as well as policy constraints such as delays in granting environmental clearances and land acquisition hurdles for projects are adding to the crisis.
Ficci president Naina Lal Kidwai said the data have “dimmed hope” for a recovery in manufacturing in the near future. A note prepared by rating agency Crisil on the economy blamed poor consumption and investment demand for hitting consu- mer goods and capital goods industries.