New Delhi, Feb 10 (PTI) With industrial production contracting to four-month low of 0.4 per cent in December, India Inc today said jobs may be imperiled if the trend continues.
“The performance of the index reflects depressed investment outlook for the industry and any such slowdown continuing for a longer period of time would have serious implications on the employment front,” Ficci Secretary General A Didar Singh said.
“Improving business environment, reducing interest rates and implementation of GST should be the priority for the Government,” he said.
Singh further said that announcements made in the Union Budget 2017-18 and their quick implementation especially on the capital formation has the potential to generate additional growth.
Principal Economist at ICRA Aditi Nayar said: “The contraction recorded by the IIP in five out of the nine months of this fiscal highlights the weakness in the industrial sector.”
Demonetisation took a toll on industrial activity as output contracted to four-month low of 0.4 per cent last December with consumer durables taking the worst hit, plummeting by over 10 per cent due to cash crunch.
The factory output had contracted 0.9 per cent in December 2015.
The latest decline reflected deterioration in the manufacturing sector on account of cash crunch following the scrapping of the Rs 500/1000 notes on November 8, 2016. The industrial output was 5.7 per cent in November and did not capture the impact of demonetisation.
Finance Minister Arun Jaitley said the contraction in industrial production in December was due to fallout of demonetisation but expected a pick-up and greater expansion in the coming months.
Factory output measured in terms of Index of Industrial Production (IIP) in December declined on account of 2 per cent contraction in manufacturing sector, as against 1.9 per cent decline a year ago.
According to data released by the Central Statistics Office today, the previous low was a contraction of 0.7 per cent in August.
During the April-December period of the current fiscal, IIP growth remained almost flat at 0.3 per cent compared to 3.2 per cent growth in the nine month period of 2015-16.
Output of consumer durables segment – TVs, refrigerators and washing machines – declined by 10.3 per cent during the month under review from robust growth of 16.6 per cent reflecting the impact of currency crunch.
This is published unedited from the PTI feed.