New Delhi - Expressing concern over industrial output, which contracted by 3.2 per cent in November, India Inc has urged the government to implement structural reforms to revitalise investments and stimulate demand.
"The steep fall in the manufacturing sector growth is because both the export and domestic demand, especially rural demand, have slowed down. It also underlines the need for more measures to stimulate investments and deeper structural reforms," Ficci President Harshavardhan Neotia said.
Dashing hopes of a recovery, industrial production contracted by 3.2 per cent in November -- the lowest level in over four years -- due to poor performance of the manufacturing sector and a sharp decline in capital goods output.
This is the worst performance since October 2011, when IIP had contracted by 4.7 per cent.
"Demand side scenarios for capital and intermediate and basic goods are not encouraging and need attention to identify the factors and remedial measures for revival.
"The negative growth further worsens the prevailing levels of demand-supply imbalances in the country. The significant shrinkage in the production of capital goods and consumer non-durables shows that industrial revival is going to be one of the major challenges in days to come," said Assocham Secretary General D S Rawat.
However, Assocham said that given the trend of data for the past few months, it sees initial signs of normalisation, adding that a slow and steady recovery is likely.
Terming the IIP data as a "major worrying factor", PHD Chamber of Commerce President Mahesh Gupta said the government must take demand-boosting measures to help industry growth.
The manufacturing sector, which constitutes over 75 per cent of the index, contracted by 4.4 per cent as against a growth of 4.7 per cent in the same month last year.
Capital goods output, which is a barometer of investment, contracted by 24.4 per cent in November 2015 compared to a growth of 7 per cent in same month of previous year.