The economic slowdown in India is gaining momentum, new government data Monday shows India's factory output fell to the lowest level in eight years, resulting in power demand across heavily industrialized states plunging to 12-year lows.
Asia's third-largest economy saw industrial production fall to 4.3% in September YoY, the lowest print since Oct. 2011.
Industrial production recorded the second straight month of declines in factory output as the automobile crisis in the country deepens.
India's economic growth slipped to a six-year low of 5% for the April-June period as the automobile industry faces a severe downturn. Consumer demand in recent quarters has also weakened, along with a slowdown in government spending.
The industrial slowdown has resulted in a 13.2% drop in India's power demand for the October period on a YoY basis, a 12 year low according to the data from the Central Electricity Authority (CEA).
"The slowdown seems to be deep-rooted, especially in the industrial sector. That would certainly increase the anxiety with regard to growth prospects in the current year," said N R Bhanumurthy, a professor at the National Institute of Public Finance and Policy in New Delhi.
Energy consumption in heavily industrialized states, including Maharashtra and Gujarat, led the declines with -20% demand drop in October, over the past year.
India's infrastructure output contracted 5.2% last month, one of the worst prints in 14 years, as economists are troubled that aggressive government spending is failing to produce a soft landing in the economy.
The epicenter of the crisis is situated in the heart of the automobile sector, something we warned about several months ago.