Industrial output fell to a 10-month low of 0.4 per cent in December, dragged down by a contraction in manufacturing.

Economists said policy makers may have to take more measures to support industrial recovery.

Manufacturing output contracted 0.1 per cent against a rise of 0.8 per cent in the preceding month, according to data released by the statistics ministry on Friday.

“Belying our expectations of a mild uptick, the YoY (year-on-year) IIP growth crumbled to a marginal 0.4 per cent in December 2021, partly on account of an unfavourable base. The contraction in capital goods, consumer durables and consumer non-durables, along with a feeble growth in the remaining categories add heft to the MPC’s decision to remain growth supportive in light of the incomplete recovery,” Aditi Nayar, chief economist, Icra said.

“The short-lived omicron wave and mobility restrictions could impair industrial output further in January. However, the rapid control of new infections and the removal of activity curbs means the economic recovery could resume from February onwards,” Barclays India said in a report.

Sunil Kumar Sinha, principal economist, India Ratings and Research, said weakness in industrial output continued. “Lacklustre IIP (index of industrial production) growth puts a question mark on the current recovery. It also indicates that policy makers may have to take more measures to support recovery as high commodity prices have made most inputs, particularly fuel and materials, quite expensive.”

While consumer durables output fell 2.7 per cent during the reporting month against 5.4 per cent in the preceding month, consumer non-durables output contracted 0.6 per cent.

Industrial production has been hit by the coronavirus pandemic since March 2020, when it had contracted 18.7 per cent. It shrank 57.3 per cent in April 2020 because the lockdown curbed economic activities.

“It is specifically concerning that consumer goods, both durables and non-durables, have recorded a YoY fall in December. This further highlights the need for a consumption boost in the economy,” Rajani Sinha, chief economist & national director — research, Knight Frank India, said.

“However, it is to be noted that on a sequential basis (month-on-month) there has been a growth of 7.5 per cent in IIP. The IIP numbers are likely to improve as omicron related concerns abate.”

“The two main engines which the government is banking on for growth in 2022-23, investment and consumption have both fared disapprovingly this month. Capital goods fell by 4.6 per cent, while consumer durables slid by 2.6 per cent and FMCG by 0.6 per cent,” Madan Sabnavis, chief economist, Bank of Baroda, said.