| Industry tanks |
Moving in tandem with the global manufacturing outlook, witnessing unprecedented contraction, India’s industrial output in October fell by 0.4% to enter the negative zone for the first time in 15 years. The slump is a result of a sharp decline in both domestic and external demand.
As per the data released by the Central Statistical Organisation (CSO), the first seven months of this fiscal year (April-October), the Index of Industrial Production (IIP) grew 4.1% compared with 9.9% during the same period a year ago.
The output of the manufacturing sector, which accounts for around 80% of IIP, shrank 1.2% in October, while those of the electricity and mining sector rose 4.4% and 2.8%, respectively. And while the output of intermediate goods and consumer goods companies fell, those of companies in the basic and capital goods sectors registered weak growth.
Although the PMI - based on a survey of 500 companies operating in India - fell to 57.3 in September from 57.9 in August, the long term outlook remains bullish as the economy continues to grow as the current slowdown is mainly attributed to lack of export orders from countries like China, US and the European Union.
Other factors contributing to the downward trend are poor credit availability and high interest rates, something the RBI is looking at easing in the near future.
World over, sharpest declines were recorded in US, Japan and the UK. Even the Eurozone Output Index also sank to its second-lowest levels. Even China’s manufacturing output is contracting every month, accentuating the risk of a slump in the world`s fourth-biggest economy.
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