India’s industrial output grew 5.6% this February, marginally higher than the 5.45% in January, with manufacturing output picking up pace to rise 5.3% even as electricity generation grew less than 10% for the first time in four months at 8.7%.
Sequentially, however, the Index of Industrial Production or IIP was 5.6% below January levels. Consumer durables production contracted for the third month in a row, to drop 4% in February while intermediate goods shrank 0.3% with output 7.2% below January levels.
The favourable base from February 2022 when consumer durables’ output had slipped by almost 10%, didn’t help much, and their production was also 0.4% below this January’s output. Bank of Baroda chief economist Madan Sabnavis attributed this to weaker demand owing to high inflation.
On the other hand, consumer non-durables saw a 12.1% surge in output this February compared to a nearly 7% decline in the same month of 2022. However, February marked the second month of a sequential decline in output with production 6% below January levels.
Capital goods production rose 10.5% year-on-year, infrastructure and construction goods were up 7.9% and primary goods grew 6.8%. However, the three segments clocked sequential declines of 0.7%, 6% and 6.6%, respectively, from their January output as per data released by the National Statistical Office (NSO) on Wednesday.
While manufacturing and electricity output lifted the IIP growth rate, the main drivers for the uptick within the manufacturing segment were chemicals, non-metallic minerals, basic metals and auto, Mr. Sabnavis said.
“Growth in industrial production in the first 11 months of 2022-23 is now 5.5% as against 12.5% last year, which may move up to between 5.5% and 6% as there is a tendency of production spikes in March with companies trying to meet targets,” he reckoned.
However, ICRA chief economist Aditi Nayar isn’t as sanguine about growth prospects in March, as a high base and heavy rainfall has weakened available high frequency indicators relative to February 2023. ”We expect the IIP growth to dip to around 3%-4% in March,” she concluded.
