NEW DELHI: Industrial output growth dropped to a 17-month low of 0.5 per cent in November on account of contraction in the manufacturing sector, particularly consumer and capital goods.
Factory output as measured in terms of the Index of Industrial Production (IIP) had grown by 8.5 per cent in November 2017, as per data released by the Central Statistics Office (CSO) Friday.
The previous low was in June 2017, when IIP growth contracted by 0.3 per cent. The growth for October 2018 was revised upwards to 8.4 per cent from 8.1 per cent. During the April-November period, industrial output grew 5 per cent as compared to 3.2 per cent in the same period of the previous fiscal.
The manufacturing sector, which constitutes 77. 63 per cent of the index, recorded a contraction of 0. 4 per cent in November as against a growth of 10.4 per cent a year ago.
Dharmakirti Joshi, Chief Economist, Crisil, said the plunge in IIP was driven by manufacturing, where growth turned negative, while electricity growth halved over October. Within manufacturing, many segments -- capital, intermediate and consumer goods -- de-grew in November.
"Last year same month, manufacturing growth had surged after GST-related constraints faced by exporters eased, the impact of demonetisation on some sectors waned, and exports darted up," he said. The mining sector posted 2. 7 per cent growth during the month as against 1.4 per cent in November 2017.
Power sector output also grew by 5.1 per cent from 3.9 per cent a year ago. Capital goods output declined by 3.4 per cent, compared to 3.7 per cent growth a year ago.
Consumer durables output also dipped by 0.9 per cent as against a growth of 3.1 per cent a year earlier. Consumer non-durable goods also saw a contraction of 0.6 per cent as compared to 23.7 per cent growth a year ago.
Commenting on the data, CARE Ratings said industrial output in the coming months is likely to be driven by the infrastructure segment.
"It is however likely to be pressured by an unfavorable base," it added.
Industrial output growth for the current fiscal year as a whole is expected to be in the range of 5-6 per cent, it added.
In terms of industries, 10 out of 23 industry groups in the manufacturing sector showed positive growth during November 2018.
As per use-based classification, the growth rates in November 2018 over November 2017 are 3.2 per cent in primary goods, (-) 4.5 per cent in intermediate goods and 5 per cent in infrastructure/construction goods.