India's industrial output contracts by 5.1% in October

India's industrial output shrunk by 5.1% in October after witnessing a sustained slowdown over the past few months, led by a steep fall in production of almost sectors, particularly manufacturing, mining and capital goods.

Factory output, as measured by the Index of Industrial Production (IIP), had grown by 11.3% in October last year.

As per data released by the government today, industrial output grew by 3.5% in the April-October period this fiscal, as against 8.7% in the same period last year.

Output of the manufacturing sector, which constitutes over 75% of the index, declined by 6% in October, compared to a growth of 12.3% in the same month of 2010.

In addition, mining output declined by 7.2% in October this year, as against a growth of 6.1% in October last year.

Production of capital goods fell sharply by 25.5% in the month under review. The segment had grown by 21.1% in the corresponding month of 2010.

Output of consumer goods also fell by 0.8% during the month under review, as against a growth of 9.3% in the corresponding month of 2010.

Furthermore, consumer durables production declined by 0.3%, compared to a growth of 14.2% in October last year.

During the month under review, output of consumer non-durables fell by 1.3%. The segment had expanded by 5% in October last year.

In a similar fashion, basic goods production witnessed a 0.1% decline in October this year, as against a growth of 9.8% in the same month of 2010.

Production of intermediate goods also fell by 4.7% during the month, compared to a growth of 9.7% in the year-ago period.

However, electricity production grew by 5.6% during the month under review, as compared to 8.8% growth in October, 2010.

Meanwhile, the IIP growth figure for September this year has been revised upward to 2 per cent from the provisional estimate of 1.9%.

The decline in industrial production numbers, as per the latest data, suggests continued sluggishness in the economy, experts said.

Last week, the government revised its growth projection for the Indian economy in 2011-12 downward to 7.5% from the earlier forecast of around 9% in the pre-Budget Survey.

India's economy grew by 6.9% in July-September, 2011, the slowest rate of expansion in nine quarters.

India Inc had attributed the slowdown to rising interest rates, which have led to an increase in the cost of borrowing, thus hindering fresh investment.

The Reserve Bank has hiked interest rates 13 times since March, 2010, to tame inflation. Headline inflation has been above the 9 per cent-mark since December last year.