India’s industrial output contracted 1.1% in August compared to the same month last year, government data showed on Friday. This was the worst performance since a 4.4% contraction in February 2013.

The cumulative industrial growth over the April-August period stood at 2.4%. Fifteen out of the 23 industry groups in the manufacturing sector showed a decline in output in August as compared to the same month last year, the government said.

This is the first instance of a contraction in the index of industrial production in over two years. The index had grown 4.6% in July, and 4.8% in August 2018.

The index declined 0.9% year-on-year for the electricity sector and 1.2% for the manufacturing sector. The mining sector showed a growth of 0.1%. In the financial year so far, the manufacturing sector index has grown 2.1%, the electricity sector 5.0% and the mining sector 2.8%. The manufacturing sector contributes 77% to the index.

The worst decline was seen in the industry group “manufacture of motor vehicles, trailers and semi-trailers”, which contracted 23.1%, followed by a 21.7% decline in the “manufacture of machinery and equipment”.

The Indian economy has been struggling with an economic slowdown for several months. The economic growth rate slipped to a six-year low of 5% in the April-June quarter. This was the fourth straight quarter of slowdown. The Reserve Bank of India on October 4 revised India’s projected growth rate for 2019-’20 downwards to 6.1%, while the Asian Development Bank cut its growth forecast from 7% to 6.5% in September.

The crisis has hit the automobile sector the most. Data released earlier in the day showed passenger vehicle sales fell for the 11th straight month in September, registering a 23.7% decline. This is one of the worst slowdowns to have disrupted the automobile industry since the collection of data of vehicles sales started in 1997.

Earlier this month, data had shown that the output of eight core sectors of the Indian industry – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity – had declined 0.5% in August compared to the same month last year. These eight sectors have 40.27% of the weight of all sectors that figure in the monthly Index of Industrial Production data.

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