India's Industrial output contracts 2.2 percent in June

New Delhi, Aug 12 (IANS) India's industrial output contracted by 2.2 percent in June, as against a deceleration of 2.0 percent in the corresponding month of 2012, owing to a slump in production in major sectors like mining and manufacturing, government data showed Monday.

The factory output, measured in terms of Index of Industrial Production (IIP), had contracted by 1.1 percent in April-June quarter of the current financial year, according to data released by the Central Statistics Office.

Leading business bodies expressed concern on the decline in manufacturing and mining sectors stating that the downward trend will impact job creation.

"The IIP figures for June are indeed a matter of concern and clearly indicate that supply side bottlenecks and weak consumer demand are weighing down on industrial growth," said Naina Lal Kidwai, president, Federation of Indian Chambers of Commerce and Industry (FICCI).

"The continuous de-growth in manufacturing will impact the employment scenario and manufacturing can be revived by stimulating demand, lowering the interest rates and expediting investment projects," Kidwai added.

According to D.S. Rawat, secretary general,Associated Chambers of Commerce and Industry of India (Assocham), the "most worrying aspect of the IIP numbers is the decline in manufacturing and mining in June, 2013. It is the manufacturing which has to look up for generation of jobs."

The country's mining output in July declined by 4.1 percent from a deceleration of 1.1 percent in the corresponding month last year. Mining output in May had declined by a massive 5.7 percent.

Cumulatively, the sector's output decreased by 4.5 percent from a fall of 1.6 percent during the corresponding period of 2011-12.

Manufacturing production registered a deceleration of 2.2 percent during July from a fall of 3.2 percent in the corresponding month of last year. In May, the sector's output contracted by two percent.

During April-June, the sector's production fell by 1.2 percent from a deceleration of 0.8 percent in the corresponding period of 2012.

The electricity sector remained stagnant with no gains in productivity, from an increase of 8.8 percent in July 2012. In May, the sector had registered a healthy increase of 6.2 percent.

However, the electricity sector reported a healthy growth of 3.5 percent in April-June period in the current fiscal, from an increase of 6.4 percent in the like period of last year.

Segment-wise growth was witnessed in rice (25 percent), three-wheelers (35.9 percent), apparel (33.3 percent), leather garments (25.5 percent), di-ammonium phosphate (DAP) (164.7 percent), PVC pipes and tubes (30 percent) and cable, rubber insulated (54.3 percent).

Segment-wise, high negative growth was reported in cigarettes (-25.1 percent), grinding wheels (-38.3 percent), copper and copper products (-67.9 percent), earth moving machinery machinery (-23.7 percent), sugar machinery (-49.9 percent) and gems and jewellery (-32.6 percent).

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