In a significant surge, India’s industrial output grew by 11.7 percent in October, marking the highest in 16 months, as per the latest Index of Industrial Production (IIP) data released by the Ministry of Statistics and Programme Implementation on December 12.
For the period of April-October 2023, industrial growth stood at 6.9 percent, up from 5.3 percent in the first seven months of the previous fiscal year. The manufacturing sector, influencing over three-fourths of the IIP, played a pivotal role in this growth, increasing by 10.4 percent.
The improvement in production volumes across sectors drove the growth, with manufacturing output rising sharply from 4.9 percent in September to 10.4 percent in October. Mining output saw a 13.1 percent increase, and electricity production jumped by 20.4 percent.
Use-Based Classification of Goods Shows Growth in October:
– Primary goods: 11.4 percent (vs. 8.0 percent in September)
– Capital goods: 22.6 percent (vs. 8.4 percent in September)
– Intermediate goods: 9.7 percent (vs. 6.1 percent in September)
– Infrastructure goods: 11.3 percent (vs. 8.9 percent in September)
– Consumer durable goods: 15.9 percent (vs. 1.1 percent in September)
– Consumer non-durable goods: 8.6 percent (vs. 3.0 percent in September)
However, economists caution that the apparent strength in the numbers might be influenced by a favorable base effect, notably due to Diwali occurring in October 2022 but in November in 2023.
Rajani Sinha, chief economist at ratings agency CareEdge, noted, “While the prospects of infrastructure and construction goods segment remain encouraging, the strong base effect has masked the weakness in the consumer goods segment.”
Aditi Nayar, chief economist at ICRA, emphasized caution in interpreting the higher-than-expected IIP expansion, pointing out that the shift in the festive calendar could impact future comparisons.
Nikhil Gupta, chief economist at Motilal Oswal Financial Services, anticipates a moderation in October-December 2023 real GDP growth, emphasizing the importance of the IIP as a key input in GDP data computation.
In summary, despite the robust October figures, economists suggest a careful analysis considering factors like festive calendar shifts, cautioning against overestimating the momentum in the industrial sector.
