Factory output shrinks by 1.9% in October

Tribune News Service

New Delhi, December 9

Industrial production dipped into negative territory in October with a contraction of 1.9%, which, analysts said, was owing to the base effect and a larger number of holidays during the festive season.

After showing decline for two consecutive months of July (-2.5 per cent) and August (-0.7 per cent), factory output, as measured in terms of the Index of Industrial Production (IIP), had grown at 0.7 per cent in September. The IIP number last year was at a higher rate of 9.9% in October.

Aditi Nayar, Principal Economist, ICRA, said an unfavourable base effect and a larger number of holidays weighed upon factory output in October, countering the much-awaited festive upturn as well as the rise in growth of merchandise exports and the core sector industries.

Nayar said the seeming collapse in growth of consumer durables from the nine-month high of 13.9 per cent in September to the marginal 0.2 per cent in October led to the sequential deterioration in the performance of the IIP. 

Additionally, the mild contraction in consumer non durables and sharp de-growth in capital goods exerted a drag on industrial output in October.