India’s factory output declined by 1.1 per cent in August as against a growth of 4.2 per cent last month on weak performance by manufacturing, power generation and mining sectors, according to government data.
The decline in the industrial output is a signal of deepening economic downturn. Experts say the decline in factory output may lead to further monetary easing by the Reserve Bank of India in December.
As per the data released by the Ministry of Statistics, manufacturing and electricity output declined by 1.2 per cent and 0.9 per cent, respectively. The output of the mining remained almost flat with a growth rate of a mere 0.1 per cent.
The manufacturing sector, which contributes over 77 per cent to the IIP, showed a decline of 1.2 per cent in output during August 2019 as against a growth of 5.2 per cent in the same month of last year.
The overall IIP growth during April-August period was 2.4 per cent, down from 5.3 per cent in the corresponding period of the last fiscal. Taking the weak economic growth into consideration, the Monetary Policy Committee of the RBI had earlier this month cut policy rates by 25 basis points.
Admitting that the economic crisis is deeper than it earlier anticipated, the RBI also revised India GDP growth forecast to 6.1 per cent in 2019-20 from 6.9 per cent projected earlier.