Industrial output for the month of September slumped to a three-month low of 5.8 percent. Data released last week on the eve of Diwali shows that weak manufacturing and consumption demand hit the output and this decline is notable when compared to the 14-month high industrial growth of 10.3 percent recorded in the previous month of August. Experts point out to several concerns.

A deeper look into the details show that the manufacturing sector growth dropped to 4.5 percent in September from 9.3 percent in August. Consumption is also a concern with consumer durables seeing a mere 1 percent increase in production while non-durable growing 2.7 percent in September despite benefiting from a favourable base effect. Moderation in growth is also witnessed in sectors like electricity and mining.

A latest survey finds that the manufacturing sector may see sustained growth in the remaining two quarters. The FICCI survey, which covered 380 manufacturers, found 57 percent of the respondents reporting higher production levels and 80 percent saying that they had a higher number of orders during the third quarter. Further, over 79 percent of the respondents reported a higher level of production in the second quarter.

The survey, however, finds that absence of robust demand may hit the manufacturing sector, with 40 percent of respondents expressing concern over tepid demand. Domestic demand has remained weak due to uneven monsoon, but as inflation is gradually coming down with easing commodity prices, some economy watchers point out that India will soon see recovery in rural markets, which, in turn, will boost the manufacturing sector.

I invite your opinions.