Manufacturing sector decelerates India's March industrial output (Roundup)

Lower production of the manufacturing sector, especially of capital goods, decelerated India's industrial output in March to 4.4 per cent from a rise of 7 per cent in February 2018, official data showed on Friday.

As per the data released by the Central Statistics Office (CSO), on a year-on-year (YoY) basis, the Index of Industrial Production (IIP) had edged higher by 4.4 per cent in March 2017.

Besides, the data showed that the sequential slowdown in factory output was mainly on account of lower production of the manufacturing sector.

However, on a year-on-year basis, the manufacturing sector expanded by 4.4 per cent, while the mining sector's output rose by 2.8 per cent and the sub-index of electricity generation increased by 5.9 per cent.

"The general index for the month of March 2018 stands at 139, which is 4.4 per cent higher as compared to the level in the month of March 2017," the CSO said in the "Quick Estimates" of IIP for March.

"The cumulative growth for the period April-March 2017-18 over the corresponding period of the previous year stands at 4.3 per cent."

Among the six use-based classification groups, the output of primary goods which has the highest weightage of 34.04 grew by 2.9 per cent. The output of intermediate goods which has the second highest weightage rose by 2.1 per cent.

Similarly, consumer non-durables's output edged-higher. It rose by 10.9 per cent and that of consumer durables by 2.9 per cent.

In addition, infrastructure or construction goods' output increased by 8.8 per cent. However, output of capital goods declined by (-)1.8 per cent.

According to the data, eleven out of the twenty three industry groups in the manufacturing sector showed positive growth during March as compared to the corresponding month of the previous year.

"March 2018 IIP growth at 4.4 per cent although came in same as March 2017 growth, however declined sequentially from high growth during November 2017-February 2018," said Devendra Kumar Pant, Chief Economist, India Ratings and Research.

"While mining and electricity output grew faster in March 2018 from February 2017, manufacturing output growth slowed down. One of the major reasons from slower output growth was unfavourable base effect of March 2017."

Aditi Nayar, Economist, ICRA said: "The extent to which IIP growth faded in March 2018 was sharper-than-expected, driven by the deteriorating performance of capital goods, as well as modest sequential dips in the growth of the other categories except consumer non-durables."

"Barring the healthy expansion of consumer durables and construction goods, that were respectively driven by items such as sugar and cement, the other use-based categories recorded a sub-3 per cent growth in March 2018."



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