October IIP at 16-month high! India’s industrial production in October reached a 16-month high of 11.7%, according to the Ministry of Statistics & Programme Implementation (MOSPI). This is a significant improvement from the contraction of 4.1% recorded in the same period last year. In September, industrial production had grown by 5.8%.
The Index of Industrial Production(IIP) is used to measure factory output.For October 2023, the Quick Estimates of IIP, based on the 2011-12 index, stand at 144.7. Data from the National Statistical Office (NSO) revealed that themanufacturing sector‘s output grew by 10.4% in October 2023, compared to a contraction of 5.8% in the same month last year. In September, it had grown by 4.5%.
Furthermore, India’s mining sector output saw a notable increase of 13.1% in October, surpassing the growth of 2.6% seen in the same period last year. In September, mining output had grown by 11.5%. The electricity sector also experienced significant growth, with a 20.4% increase in October compared to a mere 1.2% growth in the same month last year.
Dharmakirti Joshi, Chief Economist, CRISIL is of the view that the rebound in IIP suggests economic momentum continuing in the third quarter. While the high reading came on a low base, activity rose sequentially with the onset of the festive season, he noted.
Robust domestic demand conditions were reflected in electricity production that surged 20.4% this month, and rising growth in consumer goods. Rising IIP of capital goods and infrastructure and construction goods suggests a strong investment momentum.
However, Joshi says that there are signs of a slowdown ahead. “The RBI’s consumer confidence survey of December showed weakening in future expectations. Lagged transmission of the RBI’s rate hikes and measures to clamp down risky lending are expected to moderate credit growth and domestic demand. Rural demand remains vulnerable to weak agricultural output, erratic weather and El Niño this year,” he said.“The ongoing slowdown in some advanced economies is expected to add pressure on India’s exports in the second half of this fiscal,” he added.
Commenting on the robust IIP numbers, Sujan Hajra, Chief Economist at Anand Rathi said that the continuation of robust growth data, like the double-digit above-estimated industrial production number for October 2023, implies that rate cuts are not required anytime soon. “The overall pattern of rising growth and lowering inflation rates, notably core inflation, reflects India’s robust microeconomy and effective policy management. These macroeconomic figures are likely to have a positive impact on the financial markets, especially the equity and bond markets,” he said.
The IIP data comes within days of India seeing better than expected GDP growth of 7.6% in the July-September quarter of the current financial year. RBI governor Shaktikanta Das recently announced that the central bank has raised its full year GDP growth forecast for the Indian economy to 7%.
The Index of Industrial Production(IIP) is used to measure factory output.For October 2023, the Quick Estimates of IIP, based on the 2011-12 index, stand at 144.7. Data from the National Statistical Office (NSO) revealed that themanufacturing sector‘s output grew by 10.4% in October 2023, compared to a contraction of 5.8% in the same month last year. In September, it had grown by 4.5%.
Furthermore, India’s mining sector output saw a notable increase of 13.1% in October, surpassing the growth of 2.6% seen in the same period last year. In September, mining output had grown by 11.5%. The electricity sector also experienced significant growth, with a 20.4% increase in October compared to a mere 1.2% growth in the same month last year.
Dharmakirti Joshi, Chief Economist, CRISIL is of the view that the rebound in IIP suggests economic momentum continuing in the third quarter. While the high reading came on a low base, activity rose sequentially with the onset of the festive season, he noted.
Robust domestic demand conditions were reflected in electricity production that surged 20.4% this month, and rising growth in consumer goods. Rising IIP of capital goods and infrastructure and construction goods suggests a strong investment momentum.
However, Joshi says that there are signs of a slowdown ahead. “The RBI’s consumer confidence survey of December showed weakening in future expectations. Lagged transmission of the RBI’s rate hikes and measures to clamp down risky lending are expected to moderate credit growth and domestic demand. Rural demand remains vulnerable to weak agricultural output, erratic weather and El Niño this year,” he said.“The ongoing slowdown in some advanced economies is expected to add pressure on India’s exports in the second half of this fiscal,” he added.
Commenting on the robust IIP numbers, Sujan Hajra, Chief Economist at Anand Rathi said that the continuation of robust growth data, like the double-digit above-estimated industrial production number for October 2023, implies that rate cuts are not required anytime soon. “The overall pattern of rising growth and lowering inflation rates, notably core inflation, reflects India’s robust microeconomy and effective policy management. These macroeconomic figures are likely to have a positive impact on the financial markets, especially the equity and bond markets,” he said.
The IIP data comes within days of India seeing better than expected GDP growth of 7.6% in the July-September quarter of the current financial year. RBI governor Shaktikanta Das recently announced that the central bank has raised its full year GDP growth forecast for the Indian economy to 7%.
