Economy / Industrial output returns to -ve territory, contracts 1.6% in Jan

New Delhi: Industrial production re-entered the negative territory by contracting 1.6% in January, mainly on account of the decline in output of capital goods, manufacturing and mining sectors.

The output of the manufacturing sector — which constitutes 77.6% of the Index of Industrial Production (IIP) — shrank by 2% in January, as against a growth of 1.8% during the same month last fiscal, as per data released by the government on Friday.

The worst performance was witnessed by the capital goods sector, which recorded a contraction of 9.6% during the month under review, compared to a 4.4% decline a year ago.

A contraction of 3.7% was registered in the mining sector in January, against a positive growth of 4.4% in the year-ago period.

Meanwhile, the National Statistical Office (NSO), which releases the IIP data, has revised upwardly the IIP number for December 2020 from an earlier estimate of 1% to 1.56%.

Aditi Nayar, principal economist, Icra, said the slippage of consumer goods back into a year-on-year de-growth in January 2021 is a key disappointment.

The IIP contracted by 12.2% during April-January as against an almost flat growth of 0.5% seen in the same period last fiscal. As per the data, there was a contraction of 0.2% in the consumer durables segment and 6.8% in the consumer non-durable section. These two segments were in contraction during January 2020 also.