India industrial output fell in September

Nathan Andrada – Fourth Estate Cooperative Contributor

New Delhi, India (4E) – India’s concerns about slowing economic growth adds up as it posted another month of weak industrial output.

Factory output fell 0.4 per cent in September from the previous year, significantly lower than analysts’ estimate of 2.8 per cent gain. Separately, the economy saw a 1.5 per cent year-on-year drop in manufacturing activity, which comprises around two-thirds of overall output.

The September data shows that the festival season did little to boost manufacturing activity. Continued contraction in machinery and transport equipment sectors led to weak investment in improving production capacity.

Adding to India’s woes is the persistently high consumer prices, which stands at near double-digit rates. Recent steps made by the government and the Reserve Bank of India (RBI) to stem inflation made little impact as the consumer price index inched up to 9.75 per cent in October, slightly higher than the 9.73 per cent increase in September.

The disappointing data brings more pressure for policy makers to implement stimulus measures to spur economic growth.

To boost lending, the RBI last month reduced the reserve requirement for banks.

The government, however, believes there is a need to do a careful balancing act between growth and inflation.

India, like other in the region, has been hit by the weak economies in the U.S. and Europe, which has resulted to decline in the demand of their export goods.

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