India's industrial output dropped by 1.8 percent in June due to a sharp contraction in manufacturing production, government data showed Thursday. Factory output has contracted for the third time in the past four months.
During the April-June period, factory output measured in terms of the Index of Industrial Production (IIP) has contracted by 0.1 percent.
Industrial output had contracted by 0.9 percent in April. However, it had registered a growth of 2.4 percent in May, raising hope for revival.
However, the June data showed that the Indian economy remained under pressure and corrective measures were needed to revive industrial growth.
Manufacturing production dropped by 3.2 percent in June, while mining and electricity, the other two components of the IIP, registered positive growth.
Electricity output grew by 8.8 percent and mining production increased by 0.6 percent during the month under review.
Sluggish June data would increase pressure on Finance Minister P. Chidambaram to push for reform process quickly.
Early this week, the finance minister had unveiled a roadmap to revive growth by boosting investment.
There was a sharp drop in capital goods production in June. Capital goods output, a key indicator for future growth, dropped by 27.9 percent in the month under review.
Reacting to the monthly data, director general of the Confederation of Indian Industry (CII) Chandrajit Banerjee said June data was disappointing and indicated a "deepening industrial slowdown which could have a long lasting effect on the economy".
"The situation calls for urgent policy measures both by RBI as well as the government to salvage industry from further decline in industrial output," he said.
Production of electric machinery and apparatus slumped by 56 percent, output of food and beverage fell by 5.7 percent tobacco production dropped by 5.4 percent in the month under review.