The Ministry of Statistics and Programme Implementation recently unveiled data indicating a remarkable surge in India’s industrial output in August. The Index of Industrial Production (IIP) reported a staggering growth of 10.3 percent, marking the highest growth in 14 months. This figure surpassed the consensus estimate of 9.1 percent, demonstrating the sector’s robust performance.
A Positive Turnaround
- In comparison to July, where industrial growth was initially reported at 5.7 percent but later revised to 6.0 percent, August’s growth represents a substantial improvement.
- Notably, in August 2022, the industrial sector had experienced a decline of -0.7 percent, emphasizing the significant progress in just one year.
- Analyzing the industrial performance for the first five months of 2023-24, it’s evident that industrial output has increased by 6.1 percent year-on-year.
- This growth is slightly lower than the 7.7 percent recorded in the same period from April to August 2022. The previous year’s data was positively influenced by a favorable base effect.
- The robust growth in August was not limited to a single sector; instead, all three sectors – mining, manufacturing, and electricity – contributed to this upturn.
- Mining output expanded by 12.3 percent, up from 10.7 percent in July.
- In comparison, manufacturing and electricity sectors experienced substantial growth, nearly doubling their previous output.
- In August, electricity production increased by 15.3 percent, while manufacturing grew by 9.3 percent compared to the same period the previous year.
- These figures were significantly higher than the July output, which saw an 8.0 percent increase in electricity and 5.0 percent in manufacturing.
Mining: Benefiting from a rainfall deficiency in August, the mining sector recorded a double-digit growth of 12.3 percent.
- Electricity: Irregular rainfall led to increased power demand from residential and agricultural segments, resulting in a 15.3 percent growth in electricity production.
Manufacturing: A broad-based surge in manufacturing sectors, reflecting resilient domestic and export demand. Sectors such as petroleum products, machinery and equipment, textiles, and pharmaceuticals contributed to this growth.
Examining the use-based classification of goods, it’s evident that production growth in August outpaced that of July in all six categories:
- Primary goods: 12.4 percent in August, compared to 7.6 percent in July.
- Capital goods: 12.6 percent in August, as opposed to 4.5 percent in July.
- Intermediate goods: 6.5 percent in August, surpassing 2.4 percent in July.
- Infrastructure goods: 14.9 percent in August, up from 12.4 percent in July.
- Consumer durable goods: 5.7 percent in August, a notable improvement from -2.6 percent in July.
- Consumer non-durable goods: 9.0 percent in August, surpassing 7.9 percent in July.
- While the current performance is impressive, experts anticipate a gradual slowdown in industrial activity in the coming months, even though it will remain robust.
- Some categories of goods might experience a temporary boost in September and November due to shifts in the festival calendar, potentially affecting October’s figures.
- The industrial sector’s resilience remains a crucial driver of economic growth in India.