Base effects lift IIP growth to 11.7% in October
The Hindu
India’s factory output grew at a 16-month high rate of 11.7% in October, recovering from a three-month low rise of 5.8% in September, thanks to base effects from last year when output had dropped 4.1%.
India’s factory output grew at a 16-month high rate of 11.7% in October, recovering from a three-month low rate of 5.8% in September, thanks to base effects from last year when output had dropped 4.1%.
Electricity generation rose 20.4% this October, compared to 1.4% in the same month last year, while Mining was up 13.1% from 2.6% a year ago. On a sequential basis, however, electricity output was 1% below September levels and the lowest since June.
Manufacturing output grew 10.4%, as opposed to a 5.8% contraction in October 2022, but was merely 0.4% over this September and the index was its second-weakest point since July. 19 of 23 manufacturing sectors recorded growth in October, but wearing apparel and electronic goods contracted 5% and 5.3%, respectively.
On end-use basis, all six segments recorded an uptick in October, with a double-digit rise in four sectors–capital goods (22.6%), consumer durables (15.9%), primary goods (11.4%) and infrastructure/construction goods (11.3%). Capital goods and consumer durables had contracted 2.9% and 18.9% a year ago, and their output levels this October were 5.1% and 1.4% below September 2023, respectively.
Consumer non-durables’ production was up 8.6%, vis-à-vis a 13% contraction last October, but their output was 1% below September and the weakest since last November. Intermediate goods grew 9.7% in October, compared to a 2.3% shrinkage last year.
“Despite the healthy year-on-year growth, the index values for consumer durables and non-durables in October lagged their 2021 levels, when the festive season had a similar onset, suggesting that caution should be employed while interpreting the higher-than-expected IIP expansion,” said Aditi Nayar, chief economist at ICRA.
Electricity demand growth had slid from 21% in October to 6% in November and early December had clocked a contraction, she said, warning that November’s uptick in the Index of Industrial Production (IIP) may slip to 2%-4%.
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