Growth in manufacturing unit output, or index for industrial production, recovered to a two-month excessive of 5.2 per cent in January, from 4.7 per cent in December, on the again of a decrease base and double-digit growth in the electrical energy output, the Index of Industrial Production (IIP) information launched by the National Statistical Office (NSO) on Friday confirmed.
The growth in electrical energy output accelerated to 12.7 per cent, whereas manufacturing additionally recovered to 3.7 per cent. The growth in mining output, nonetheless, decelerated to 8.8 per cent from 9.8 per cent final month.
In the primary 10 months of FY23 (April-January), IIP grew 5.4 per cent in opposition to 13.7 per cent throughout the year-ago interval.
Ten of 23 manufacturing sectors in the IIP, akin to tobacco, textiles, attire, leather-based, wooden, metals, computer systems, transport, furnishings, and different manufacturing sectors, registered contraction throughout January.
Rajani Sinha, chief economist, CARE Ratings, mentioned export-intensive objects akin to textiles, leather-based and apparels continued to witness contraction in output, whereas growth in the patron non-durable items output for the third consecutive month is a optimistic improvement.
“Resilient urban demand, easing commodity prices and improvement in rural demand are tailwinds for industrial output. Going ahead, factors such as high inflation, rising interest rates, weak external demand and waning domestic pent-up demand pose downside risks for the momentum in industrial activity,” she added.
Madan Sabnavis, chief economist at Bank of Baroda, mentioned the manufacturing growth has been on the decrease aspect, regardless of a low base final yr, primarily as a result of the production-linked incentive (PLI) scheme features haven’t accrued to the export-intensive sectors akin to textiles and electronics.
“Growth was pushed down mainly by textiles and electronics, with the former being affected by rising costs and declining exports due to global slowdown. Computers/electronics group witnessed a 29.6 per cent fall this month. The sector was to benefit the most from the PLI scheme. Given that growth has declined 3 per cent for 10 months, it does look like the gains have not yet accrued,” he added.
Infrastructure items and capital items grew at a sturdy 8.1 per cent and 10.95 per cent, respectively.
Consumer durables comprising fast-moving shopper items (FMCG) contracted (7.5 per cent) for the second straight month, signalling the impact of upper inflation. The shopper non-durables sector, nonetheless, expanded for the second straight month since November, and recorded a 6.2 per cent growth.
Aditi Nayar, chief economist, ICRA, mentioned growth in January was largely in line with the growth prospects with a wholesome efficiency of major, capital and infra items and shopper non-durables, thus, offsetting the marginal rise in intermediate items and discouraging contraction in shopper durables.
“Despite the subdued base related to the third wave of Covid-19, some of the available high frequency indicators recorded a weaker year-on-year (YoY) performance in February 2023, relative to January 2023, such as Coal India Limited’s output, rail freight traffic, ports cargo traffic, electricity generation and auto output. In contrast, vehicle registrations and finished steel consumption witnessed an improved performance in February 2023, relative to the previous month. Based on these trends, we expect the IIP to record a dip in the YoY growth to 3-5 per cent in February 2023,” she added.
The IIP information comes in the wake of the quarterly estimates of gross home product (GDP) for the Q3, FY23, launched by the Ministry of Statistics and Programme Implementation (MoSPI), earlier final week. The information confirmed that the financial system grew 4.4 per cent in the third quarter as manufacturing output contracted for the second consecutive quarter, and shopper demand slowed. However, the estimates are nonetheless hopeful that India’s gross home product (GDP) would develop at 7 per cent in FY23.
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