In a fresh setback, industrial production saw the sharpest contraction in three years of 4.2 percent in October, though retail inflation dipped to 4.3 percent, putting pressure on RBI to cut rate to boost growth.

Factory output as measured by Index of Industrial Production (IIP) declined due to contraction in manufacturing, capital goods and consumer items.

“It not only reflects slowdown in investments but also the deep rooted slackness in consumer demand which requires bringing down the interest rates urgently,” said Ficci President Sidharth Birla while commenting on IIP data.

“It would also need faster implementation of governments intentions to introduce reforms in which states have major role to play,” he added.

The factory output for the month under review was the lowest since October, 2011 when it had recorded a contraction of 4.74 percent. IIP had declined by 1.2 percent in October last year.

For September, it was revised to 2.8 percent from the provisional estimates of 2.5 percent released last month, according to the official data on Friday.

For the April-October period, IIP is up 1.9 percent, as against 0.2 percent in same period of last fiscal.

Manufacturing output, which constitutes over 75 percent of the index, contracted by 7.6 percent in October, compared to a dip of 1.3 percent in same month last.

For April- October, the sector saw an output growth of 0.7 percent, compared to a contraction 0.1 percent in the year-ago period.

The production of capital goods, a barometer of demand, declined by 2.3 percent in October, as against a growth of 2.5 percent in same month of last year.

For the April-October period, capital goods output is up 4.8 percent, as against a dip of 0.2 percent a year ago.

Meanwhile, according to the Consumer Price Index data, cheaper food items helped retail inflation drop to a new low of 4.38 percent in November — the fifth consecutive month of decline.

As per the IIP data, consumer goods output too contracted by 18.6 percent in October as against a decline of 5 percent logged a year ago.

For the April-October period, the segment showed a contraction of 6.3 percent, compared to a decline of 1.7 percent in the same period of 2013-14.

Overall, 16 of the 22 industry groups in manufacturing showed negative growth in October.

As for the retail inflation, this is the lowest level CPI- based rate of price rise since the government started computing the new series of data in January 2012.

It stood at 5.52 percent in October 2014. It was more than double the current level at 11.16 percent in November 2013.

The food inflation also came down to 3.14 percent in November as against 5.59 percent in the previous month.