The Index of Industrial Manufacturing, or IIP, is a key indicator of India’s month-to-month exercise ranges.
India’s industrial output grew by 11.7 p.c in October, based on information launched by the Ministry of Statistics and Programme Implementation on December 12, as a beneficial base impact propelled manufacturing output 10.4 p.c larger.
Manufacturing, which accounts for greater than three-fourths of the IIP, closely influences the economic progress information.
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At 11.7 p.c, the newest industrial progress determine as per the Index of Industrial Manufacturing (IIP) is the very best in 16 months.
IIP progress had are available at a three-month low of 5.8 p.c in September. This quantity now stands revised at 6.2 p.c. In October 2022, India’s industrial output had contracted by 4.1 p.c.
For the seven months of 2023-24, India’s industrial output is up 6.9 p.c year-on-year as in opposition to 5.3 p.c in April-October 2023.
In October, industrial progress was pushed up by an across-the-board enchancment in manufacturing volumes, with the manufacturing sector’s output rising by 10.4 p.c from 4.9 p.c in September.
The opposite two sectors too posted equally sharp will increase in output. Whereas mining output was up 13.1 p.c as in opposition to 11.5 p.c in September, electrical energy manufacturing jumped by 20.4 p.c, sharply larger than the 9.9 p.c progress it had posted the earlier month.
When it comes to the use-based classification of products, manufacturing progress in October was larger for all six classes in comparison with September:
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>> Main items: 11.4 p.c versus 8.0 p.c in September
>> Capital items: 22.6 p.c versus 8.4 p.c in September
>> Intermediate items: 9.7 p.c versus 6.1 p.c in September
>> Infrastructure items: 11.3 p.c versus 8.9 p.c in September
>> Shopper sturdy items: 15.9 p.c versus 1.1 p.c in September
>> Shopper non-durable items: 8.6 p.c versus 3.0 p.c in September
With a beneficial base impact – due to Diwali going down in October in 2022 however in November in 2023 – leading to a giant IIP progress quantity for final month, economists warned the image was not all that rosy.
“Whereas the prospects of infrastructure and building items section stay encouraging, the robust base impact has masked the weak spot within the client items section,” mentioned Rajani Sinha, chief economist at scores company CareEdge.
Whereas manufacturing of client durables and non-durables was up 15.9 p.c and eight.6 p.c, respectively, in October in comparison with the identical month final yr, each their indices – which correspond to precise manufacturing figures – had been 5 p.c decrease than what they had been in the identical month of 2021.
In 2021, Diwali had occurred on November 4.
This, based on Aditi Nayar, chief economist at ICRA, means that “warning ought to be employed whereas decoding the higher-than-expected IIP growth” final month.
“Furthermore, electrical energy demand progress had slid from 21 p.c in October 2023 to six p.c in November 2023, earlier than a contraction emerged in early December 2023,” Nayar additional mentioned, including that she expects IIP progress to decelerate sharply to 2-4 p.c in November because of fewer variety of working days (on account of the competition season) and an unfavourable base impact.
“Given the shift within the festive calendar, we consider it could be extra significant to check the common year-on-year progress efficiency in October-November 2023 vis-à-vis October-November 2022,” Nayar added.
IIP progress has averaged 9.0 p.c in October-November 2023 as in opposition to 1.8 p.c in the identical two months final yr.
“All mentioned and performed, we anticipate moderation in October-December 2023 actual GDP progress,” mentioned Nikhil Gupta, chief economist at Motilal Oswal Monetary Companies.
The IIP is a key enter within the computation of quarterly GDP information. In July-September, India’s progress price got here in at a far higher-than-expected 7.6 p.c, resulting in economists – in addition to the Reserve Financial institution of India – elevating their forecasts for 2023-24. The federal government is anticipated to comply with swimsuit and make an analogous upward revision to its forecast of 6.5 p.c someday later this month.
