Industrial output shrinks by 1.1% in Aug

Industrial output shrinks by 1.1% in Aug

Updated on 12 October, 2019

Daily Updates

Industrial growth shrank 1.1% in August, after a gap of 26 months, reinforcing fears of a slowing economy and deteriorating consumer sentiment.

  • Industrial production, as measured by the index of industrial production (IIP) had grown 4.8% August last year.
Industrial output shrinks by 1.1% in Aug
  • Data released by the statistics office showed April-August factory output growth at 2.4% well below 5.3% for the same period in the last fiscal.
  • IIP growth has been lowest in the last 81 months and first contraction after June 2017
  • In all, 15 out of 23 industry groups reported positive growth.
  • Production of consumer non-durables, a barometer for the rural economy, rose 4.1% in August but that of consumer durables, demand for which is more urban-centric, shrank 9.1%.
  • Production of capital goods, an indicator of investment activity, contracted 21%. Growth has been driven down sharply by consumer durables and capital goods.
  • Two of the three key constituents of IIP-manufacturing and electricity contracted 1.2% and 0.9%, respectively while mining growth was 0.1%.
  • India's passenger vehicle sales slumped 23.7% in September, the eleventh straight month of declines.
  • Indian economy is presently facing a structural growth slowdown originating from declining household savings rate, and low food inflation and agricultural growth.
  • Low agricultural growth is feeding into low agricultural and non-agricultural wage growth in rural areas, which is impacting rural demand adversely,
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