India’s industrial output grew 1.3% in January 2022, recovering marginally from a revised growth rate of 0.7% for December 2021, but was still only 0.7% above pre-pandemic levels, as per data from the National Statistical Office (NSO).
Manufacturing output rose 1.1%, while mining production grew 2.8% and electricity generation went up by 0.9% year-on-year. The growth in manufacturing and mining production is largely attributable to base effects as the two sectors’ output had shrunk by 0.9% and 2.4%, respectively, in January 2021, when the overall index of industrial production (IIP) had contracted 0.6%.
Production of consumer durables slumped for the fifth month in a row in January, contracting 3.3% compared to a 0.1% shrinkage a year ago. Private consumption appeared subdued even after factoring in fast moving consumer goods.
While consumer non-durables output grew 2.1% year-on-year in January, the fastest pace since August 2021, it marked a significant 5% decline from December 2021 levels. Output growth in the segment had contracted fractionally from 2020 levels, in September as well as December 2021.
Capital goods’ production also shrank for the fourth successive month, dipping 1.4% in January compared to a sharper 3.76% drop in December. Capital goods’ output had declined a sharp 9% in January 2021.
Primary goods output growth slowed in January to 1.6% from 2.7% in December 2021, but infrastructure and construction goods’ surged at the highest pace in three months at 5.4%, compared to just 2.05% in December. The NSO also revised its estimates for industrial output growth in October 2021 to 4.16% from 4.01% estimated earlier.
“Relative to the pre-Covid level of January 2020, the IIP displayed a mild 0.7% rise, with lower output of consumer durables and non-durables as well as capital goods imposing a drag,”said ICRA chief economist Aditi Nayar.
However, the pickup in growth of infrastructure/construction goods in is promising after the contraction in construction Gross Value Added (GVA) in the economy in the third quarter of 2021-22,” she added.
ICRA expects IIP growth to stay below 2% even in February, as manufacturing and electricity generation are unlikely to see a surge and mining output from state-run Coal India Limited has been lower than 2021.