Industrial output shrinks 0.8% in April

The country's industrial output contracted for the first time in three months in April, dragged down by the manufacturing sector and a sharp decline in capital goods, consumer goods and non durables.
Industrial output fell an annual 0.8% in April compared to the previous month's upwardly revised expansion of 0.3% and growth of 3% year-on-year.
The manufacturing sector fell an annual 3.1% during the month compared to a growth of 3.9% year-on-year in April 2015. The mining sector rose an annual 1.4% compared to the year earlier decline of 0.6%. The electricity sector was the start performer, rising an annual 14.6% in April, its highest expansion in 2 years.
The capital goods sector, which is a barometer economic activity , shrank an annual 24.9% in April compared to an expansion of 5.5% in April 2015. This is the sixth consecutive month of decline for the sector, signalling weak investment.
But data on capital goods has been volatile and has often drawn criticism from economists who say it is difficult to derive a trend. The government is in the process of revamping the industrial output data in the next few months.
Experts say the data is on the 2004-05 base and given the rapid change in the economy over the last decade, there is an urgent to revise the data to 2011-12 base on which GDP and inflation are calculated.
Consumer durables rose a robust 11.8% year-on-year compared to 1.3% expansion in April 2015 while consumer goods and consumer non-durables shrank displaying a weakness in these two sectors.
Economists said despite the weak data there were triggers in the economy which could push growth in the coming months.
Experts cite the possibility of robust monsoon rains and the anticipated rise in salaries of government employees after the 7th Pay Commission as drivers which could push up rural growth and demand in the economy .
The rebound in core sector industries in April, which accounts for 38% of the index of industrial output, had triggered hopes of a rebound in the segment. The broader economy has posted a growth rate of 7.6% in 2015-16, pushing India as the fastest growing major economy in the world.

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