Electricity generation grew less than 10% for the first time in four months at 8.7%. photo credit: Reuters
India’s industrial output grew 5.6% this February, slightly higher than 5.45% in January, manufacturing output grew by 5.3%, while electricity output grew by less than 10% to 8.7% for the first time in four months.
Sequentially, however, the Index of Industrial Production or IIP was down 5.6% from January’s level. Consumer durables output fell 4% in February for the third month in a row, while intermediate goods shrank 0.3%, with output down 7.2% from January’s level.
The favorable base from February 2022 when the production of consumer durables fell by almost 10% did not help much, and their production was also 0.4% lower than this January’s output. Madan Sabnavis, chief economist at Bank of Baroda, attributed this to weak demand due to high inflation.
On the other hand, consumer non-durables saw a 12.1% growth in production this February as against a decline of about 7% in the same month of 2022. However, in February, the second month of sequential decline in production, the output remained below 6% of January’s level.
Capital goods output grew by 10.5% year-on-year, with infrastructure and construction goods up by 7.9% and primary goods by 6.8%. However, the three segments saw sequential declines of 0.7%, 6% and 6.6% respectively from their January output, according to data released by the National Statistics Office (NSO) on Wednesday.
Mr Sabnavis said that while manufacturing and power generation drove the IIP growth rate, the main drivers of growth in the manufacturing sector were chemicals, non-metallic minerals, basic metals and autos.
“Industrial production growth in the first 11 months of 2022-23 is now at 5.5% as compared to 12.5% last year, which may increase between 5.5% and 6% as there is a trend of production spikes in March, in which companies are trying meet the targets,” he said.
However, ICRA Chief Economist Aditi Nayar is not optimistic about growth prospects in March, as a high base and heavy rainfall have weakened available high-frequency indicators relative to February 2023. % in March,” he concluded.