The index of industrial production turned negative after a gap of nearly two years as it contracted 0.1 per cent in August, primarily due to weak performances by the mining and power generation sectors, according to official data released on Friday.

The index of industrial production (IIP), which measures factory output, registered a growth of 10.9 per cent in August 2023.

"The IIP growth rate for August 2024 was (-) 0.1 per cent, compared with 4.7 per cent in July 2024," an official statement said.

Mining output contracted to -4.3 per cent in August, down from 3.8 per cent in the previous month.

Similarly, electricity output declined to -3.7 per cent from 7.9 per cent.

Manufacturing output decelerated to 1 per cent from 4.4 per cent in July.

From April to August 2024, IIP grew by 4.2 per cent compared with 6.2 per cent in the corresponding period of the previous fiscal year.

Use-based categories such as capital goods, intermediate goods and consumer durables also decelerated during the month.

Primary goods and consumer non-durables contracted, reflecting skewed demand in the economy.

The decline in mining sector growth was attributed to heavy rainfall in August 2024.

Economists Aditi Nayar of ICRA and Madan Sabnavis of Bank of Baroda attributed the marginal contraction in IIP to temporary factors such as unfavourable base effects and the impact of heavy rainfall on mining and electricity output.

They also noted a mixed trend in economic activity in September, with some indicators showing improvement while the others remained weak.

Nayar anticipated a slight improvement in IIP growth to 3-5 per cent in September.

Rajani Sinha, chief economist, CareEdge, said: “Although the monsoon has been favourable, its distributional issues remained. Domestic private consumption demand is expected to pick up during the early festive season this year."

Use-based categories such as capital goods, intermediate goods, and consumer durables decelerated during the month.