The fall in industrial production to 5.6 percent during August is likely to have negative impact on the service sector, said industry body ASSOCHAM on Tuesday. 

"The implications of falling industrial production will pull down the services sector as most of its products are intermediate in nature and the combined effect on employment poses a grave concern to the economy," said ASSOCHAM President, Swati Piramal in a press release.

The industrial production data for the month of August indicates that industrial production, in general, on year over year basis stood at 5.6 percent for the month.

Mining, manufacturing and electricity sectors respectively grew at 7.0 percent, 5.9 percent and 5.6 percent during the month. These figures pull down the cumulative growth in industrial production since April 2010 from 11.4 percent to 10.6 percent.

The pull has mainly resulted by the fall in the growth rate of mining (from 10.0 percent to 9.4 percent) and manufacturing (from 12.2 percent to 11.3 percent).

As against the general growth in industrial production, some of the labour intensive industries like the wood and wood products, furniture & fixtures and textiles (including wearing apparel) have shown negative growth.

"While the negative growth in the production of consumer non-durables continues to be a cause of concern, the month has seen that the production of capital goods too slipping," said ASSOCHAM.

Piramal said that the sustainability of industrial recovery in the absence of government support still remains a major concern.  

The ASSOCHAM chief urged the government to keep note of the recent OECD projections of below trend growth rates of Indian economy in the coming months and take serious measures.