Oct IIP contracts 1.9 %; pain will persist, post currency demonetisation

Index of Industrial Production, which is a measure of the growth in the economic activities of the country was released on Friday, December 9, 2016. IIP for the month of October stands at (-) 1.9 per cent, shrinking from the prior month’s figure of 0.7 per cent.

In the prior month of September, the IIP had increased by 0.7 per cent. The fall in industrial production is testimony of the fact that festive season too was unable to revive the industrial activity in the country which has witnessed sluggish growth in the past few months. The poor figures could also be attributed to large number of holiday’s in October owing to festivals.

Consumer Durables output has grown by 0.2 per cent as against a growth of 14 per cent achieved in the previous month of September.

The `manufacturing’ sector, which represents more than 75 per cent of the industrial index, has declined by 2.4 per cent in October, down from expansion of 1 per cent in the month of September.

Another important constituent i.e capital goods output, which gauges the capacity addition of companies, has now contracted for twelve straight months to 25.9 per cent in October from 22 per cent in September.

Moreover going by analysts' and economists' predictions more pain is likely to be seen in the November numbers post demonetisation.