High base effect, along with supply side constraints such as semiconductor shortages, eased India’s industrial output growth to 3.2 per cent in October, on both year-on-year and sequential basis.
The rise in Index of Industrial Production (IIP) for October marginally eased to 3.2 per cent from 3.30 per cent in September 2021.
Similarly, on a year-on-year basis, the October output showed a decelerating trend from a growth of 4.5 per cent reported for the corresponding period of the previous fiscal.
“For the month of October 2021, the Quick Estimates of Index of Industrial Production with base 2011-12 stands at 133.7,” the Ministry of Statistics and Programme Implementation said.
“The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2021 stand at 109.7, 134.7 and 167.3 respectively.”
In terms of Yoy percentage basis, the mining excavation output grew by 11.4 per cent from (-) 1 per cent in 2020-21, but, manufacturing production fell 2 per cent from 4.5 per cent and electricity generation decreased by 3.1 per cent from 11.2 per cent.
Among the major use-based segments, the October data, on a YoY basis, showed that manufacturing of primary goods grew by 9 per cent from (-) 3.1 per cent, whereas capital goods production fell by (-) 1.1 per cent from a rise of 3.2 per cent, and intermediate goods decreased by 2.1 per cent from 3.2 per cent.
The production of infrastructure or construction goods also fell by 5.3 per cent from 10.9 per cent.
Consumer durables’ production fell by (-) 6.1 per cent from a growth of 18.1 per cent and the sub-segment of consumer non-durables grew by just 0.5 per cent from a rise of 7.3 per cent.
ICRA Chief Economist Aditi Nayar said: “Industrial growth printed at a stable yet tepid 3.2 per cent in October 2021, with the festive season boost being negated by the supply side issues afflicting the auto sector, as well as a higher base.”
“The disaggregated data does not provide convincing signals of the recovery becoming durable and broad-basing further, with capital goods and consumer durables reporting a YoY contraction in October 2021.”
India Ratings & Research Chief Economist Devendra Kumar Pant said: “Despite 25.3 per cent growth in GST collection and 7.5 per cent growth in core infrastructure sectors, October 2021 IIP growth was impacted by the base effect and grew 3.2 per cent only.”
“The IIP growth has been very fragile and even festive demand was not able to uplift IIP growth in October 2021. A contraction of 6.1 per cent for consumer durable and 0.5 per cent growth in consumer non-durable are testimony of weak demand conditions in the economy. Only the mining sector has shown good growth of 11.4 per cent.”
Acuite Ratings & Research Chief Analytical Officer, Suman Chowdhury said: “While the momentum of industrial revival is slower than expected, the output levels have started to exceed the pre pandemic levels.”
“We expect moderate growth in IIP over the next few months given the raw material shortages and thereby, the likely production constraints in certain sectors.”