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Factory output gives the jitters

New Delhi, Jan. 10: Industrial output contracted for the second straight month in November at 2.1 per cent, a sign of the persistence of a nagging slowdown that is adding pressure on the government to take steps to boost the economy ahead of the Lok Sabha polls. The index of industrial production had fallen 1.6 per cent in October.

Ficci president Sidharth Birla said the numbers were disturbing and that the “fall in manufacturing growth has not yet bottomed out….urgent measures and fresh thoughts are required to boost manufacturing, without which jobs potential here will remain depressed”.

The slump in industrial activity was driven by a 3.5 percent decrease in manufacturing, which constitutes about 76 per cent of industrial production. Ten out of 22 industry groups in the manufacturing sector have shown negative growth in November.

Consumer goods were the worst performers, especially consumer durables, which contracted 21.5 per cent in November against a growth of 1.1 per cent a year ago.

During April-November 2013, the durables segment declined 12.6 per cent compared with a growth of 5.2 per cent the same period in 2012.

Overall, consumer goods output declined 8.7 per cent in November compared with a contraction of 0.3 per cent in the same month in 2012.

However, the numbers were partially offset by a 1 percent gain in mining output.

Electricity production was also higher by 6.3 per cent.

Outputs of basic goods and capital goods, a barometer of investments in the economy, were higher by 0.7 per cent and 0.3 per cent, respectively.

The growth in consumer non-durables was 2.5 per cent in November against a contraction of 1.5 per cent in the same month in 2012. During April-November 2013, the segment’s growth was 6.3 per cent compared with 2.3 per cent growth in the same period in 2012.

Chandrajit Banerjee, director-general of the CII, said, “What is causing concern is the performance of the manufacturing sector, indicating that new investments are still not happening. The low base of last year also magnifies the concerns… more needs to be done to revive investment. The government should send out positive signals that it is renewing its focus on growth.”

”The red marks on IIP are a matter of serious concern underscoring the need for immediate policy intervention by the RBI and the government,” Assocham president Rana Kapoor said.

 
 
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