India’s industrial output grew 1.8 percent in November against a contraction of 3.8 percent in October, according to the Index of Industrial Production (IIP) data released by the government on January 10.
Industrial output, or factory output, is the closest approximation for measuring the economic activity of the country’s business landscape.
Manufacturing output, which accounts for more than three-fourths of the entire index, grew 2.7 percent in November, against a contraction of 2.1 percent in October.
Mining production grew 1.7 percent against a fall of 8 percent a month ago.
The growth of primary products fell 0.3 percent against a fall of 6 percent last month. Production of capital goods in November saw a contraction of 8.6 percent against a fall of 21.9 percent in October.
“On a month on month basis, growth has been broad-based with capital and durable goods showing considerable improvement. Relative to the previous year, growth in manufacturing has been impressive, although it could not build on the past month’s growth momentum,” said Rumki Majumdar, an economist with Deloitte India.
Consumer durables fell 1.5 percent in November against a fall of 18 percent last month. Electricity production fell 5 percent against a contraction of 12.2 percent in October.
“… turnaround in factory output growth from degrowth to growth though is a welcome sign, it still cannot be interpreted as some kind of a green shoot on the industrial front as a number of key use based sectors like consumer durables, capital goods, basic goods and infrastructure goods are still showing degrowth,” said Sunil Kumar Sinha, Principal Economist, India Ratings.
According to the advanced estimate released by the Central Statistics Office (CSO), the economic growth rate for 2019-20 has been pegged at 5 percent, slower than the 2018-19 expansion rate of 6.8 percent.
India’s GDP — the total value of goods and services produced in the country — slumped to over a 6-year low of 5 percent in the April -June quarter and 4.5 percent in the July – September quarter of 2019.
The government estimated that gross value added (GVA), which is GDP minus net taxes, will grow at 4.9 percent in 2019-20.
The GDP numbers have confirmed fears of a deepening slowdown in the economy as households aren’t spending enough to buoy demand and companies aren’t adding capacities or hiring more.
GVA grew 4.3 percent in July-September 2019, compared to 4.9 percent in the previous quarter and 6.9 percent in the second quarter of the previous year.
The slowdown comes on the back of the 5 percent GDP growth recorded in April-June and 7.1 percent in July-September last year.
The CSO projected that the manufacturing sector will grow at 2 percent in 2019-20 against 6.9 percent in 2018-19, while mining and quarrying will grow at 1.5 percent against 1.3 percent last year.
Experts said that as long as the majority of the use-based sectors show positive growth on a sustained basis, it would be difficult to believe that the Indian industrial sector has completely recovered.