India’s factory output growth decelerated to its lowest in 10 months at 0.4 percent in December as the third wave of the pandemic led to lockdowns across the country causing disruptions in economic activities.
Data released by the statistics department showed manufacturing output contracted 0.1 per cent in December while mining and electricity grew at 2.6 per cent and 2.8 per cent, respectively.
During the month, output of capital goods, consumer durables and consumer non-durables contracted while output of intermediate goods remained almost unchanged compared to their levels a year ago.
The Monetary Policy Committee of the Reserve Bank of India on Thursday kept key policy rates unchanged contrary to expectations of a hike in reverse repo rate, flagging the need to revive and sustain growth on a durable basis.
The MPC flagged the potential downside risks to economic activities from the contagious Omicron variant of Covid-19 and observed some loss of momentum as reflected in high-frequency indicators — such as the purchasing managers’ indices for both manufacturing and services, and finished steel consumption and sales of tractors, two-wheelers, and passenger vehicles — while adding that the demand for contact-intensive services was still muted.
Citing loss of the momentum of near-term growth while global factors are turning adverse and gradually improving domestic growth drivers, RBI projected the Indian economy to grow at 7.8 per cent in FY23 against 8-8.5 per cent estimated by the Economic Survey.