India’s industrial output growth slowed to 3.8% in January, from an upgraded uptick of 4.24% in December, with the manufacturing sector’s growth slowing to 3.2% from 4.5% a month ago and consumer non-durables slipping into contraction for the second time in three months.
Mining and electricity generation accelerated to 5.9% and 5.6%, respectively. Consumer durables production jumped 10.9%, the highest growth in three months, but gained from base effects as their output had contracted 8.2% in January 2023. Consumer non-durables output shrank 0.3%.
Capital goods production picked up pace to grow 4.1% in January, and intermediate goods also grew faster at 4.8% compared to 3.9% in December 2023. However, the growth rates for primary goods and infrastructure/construction goods eased to 2.9% and 4.6%, respectively in January.
Eight of the 23 manufacturing segments tracked by the National Statistical Office to compute the Index of Industrial Production (IIP) recorded a contraction in January, with computers, electronics and optic products seeing the steepest fall of 11.9%, while pharmaceuticals’ output remained flat compared to last January.
Between April 2023 and January 2024, electronics and computers have now contracted 14%, second only to the 17.5% drop in wearing apparel production over the same period. In January, wearing apparel production fell 1.6%.
On the other hand, other transport equipment grew 25.3%, fabricated metal products rose 21.4%, followed by motor vehicles and furniture whose output rose 18% and 15.1%, respectively, in January.
Bank of Baroda chief economist Madan Sabnavis said electronics’ performance remains a disappointment as it is also covered under the Production-Linked Incentive or PLI scheme. “Clearly, it has not yet provided momentum to production so far,” he said.
ICRA chief economist Aditi Nayar reckoned that the IIP growth will remain in the range of 3%-4% in February as well, based on available high frequency data and the base effects from the 6% rise recorded last year.
