Factory output in January contracted for the third straight month, in an indication that the manufacturing sector continues to struggle with sluggish demand and overcapacity.
According to data released on Friday, factory output — measured by Index of Industrial Production (IIP) – contracted 1.5 per cent in January. The higher-than-expected decline was on account of the sharp de-growth in capital goods, whose output shrank 20.4 per cent. Consumer goods output growth was flat.
10 out of the 22 industry groups in the manufacturing sector recorded negative growth in January 2016 as compared to the same month last year.
Positive growth was recorded by the mining sector, where output rose 1.2 per cent, and in the electricity sector, where output rose 6.6 per cent.
The factory output data comes as a huge disappointment to the government that aims at raising the contribution of manufacturing output from the current 16 per cent to 25 per cent of gross domestic product (GDP) by 2025.
April-January IIP stood at 2.75 per cent. December IIP was revised to negative 1.2 per cent.