In a rather disappointing start to this fiscal year, India's factory output fell 0. 8 per cent in April against a marginal growth of 0. 30 percent in the month before and 3 percent in April last year, official data showed on Friday.
In reaction, India Inc said negative growth of the general index "further worsens the prevailing levels of demand - supply imbalances in the country. "
As per data on Index of Industrial Production (IIP) released by the Central Statistics Office (CSO), the fall was mainly on account of a 3. 1 per cent drop in manufacturing output, which also has the maximum weight in the overall index.
Among the other two major sub - indices, while the one for electricity generation rose a robust 14. 6 per cent, that for mining expanded by just 1. 4 per cent.
In the past six months, the general index has taken a drop on four occasions, while growing by a mere 2 per cent in February and 0. 3 per cent in March.
October was the last month when there was a robust growth, with the general index rising by 9. 87 per cent, surprising stakeholders.
What is also surprising about Friday's data is that the Commerce and Industry Ministry's statistics on eight core industries, which have a combined weight of 38 percent in the overall industrial production index, showed a growth of 8. 5 per cent in April.
Nonetheless, the Reserve Bank of India, in its latest monetary policy update gave some hope.
"The Reserve Bank's latest rounds of forward looking surveys indicate an improvement in the overall business situation, driven by a pick - up in capacity utilisation and in order books - - both domestic and external, " Governor Raghuram Rajan said on Tuesday.
"These developments have improved the expectation of business conditions in the first half of 2016 - 17.
Public investment, especially in roads and railways, is gaining strength, though the continuing weakness in private investment is of concern, " he said.
"Demand conditions are likely to improve going forward; consumer confidence is seen as rising on improving expectations of employment and spending, with rural demand aided by a stronger monsoon.
Rising capacity utilisation should prompt private investment. "
The IIP data of Friday had some further cause for concern, going by sectoral classifications.
The index for capital goods, was down 24. 9 per cent in April, that for consumer goods was lower by 1. 2 per cent and for consumer non - durables by 9. 7 per cent.
Consumer durables, on the other hand, grew 11. 8 per cent, intermediate goods by 3. 7 per cent and basic goods by 4. 8 per cent.
"In terms of industries, nine out of the 22 industry groups in the manufacturing sector have shown negative growth during the month of April 2016, as compared to the corresponding month of the previous year, " said the statement by the statistics office.
"The latest estimates of industrial production are a negative sign towards growth cycle of industrial activity in India since it has come into negative territory after it rose continuously for last two months thereby showcasing unstable industrial growth", industry body Assocham said in a statement
"The output of capital goods, a barometer of investment, registered negative growth of about ( - )25 per cent as compared to 5. 5 per cent in April 2015.
This is a major area of concern and needs immediate policy intervention, " D. S. Rawat, secretary general Assocham said.
"The negative growth of general index further worsens the prevailing levels of
demand - supply imbalances in the country, " he added.
Harshavardhan Neotia, president of industry chamber Ficci said: "The growth in manufacturing may take some more time to pick up as the measures taken by the Government in the last few months start yielding results.
"There is an unfinished agenda of the reforms which the present Government is trying to address.
The manufacturing sector growth is dependent on many other factors too like the overall demand scenario in the economy. "