India’s Industrial output grows 3.5% in October

Factories led the uptick with a 4.1% rise in October. File
| Photo Credit: Reuters

India’s industrial output grew at a three-month high pace of 3.5% in October, from 3.1% in September, with factories leading the uptick again with a 4.1% rise, while mining and electricity growth remained anaemic at 0.9% and 2%, respectively. In absolute terms, output levels were at a four-month high in October, with the Index of Industrial Production (IIP) at 149.9, 2.2% over September.

Base effects had some role to play in the relatively mild growth reported in October as the IIP had risen 11.9% in the same month of 2023. For instance, the tepid mining growth came on the path of a 13.1% rise in October 2023, but reflected the highest output in four months.

On the basis of end-use, consumer durables led the way for the second straight month, rising 5.9% in October after a 6.5% growth in September, likely linked to factories pushing out products for the festive season. However, durables production in October was 2.2% lower than September.

Consumer non-durables also grew 2.7% relative to a 9.7% uptick last October, marking the best growth in six months. Apart from non-durables, three other end-use segments showed a mild improvement in growth — primary goods (up 2.6%), intermediate goods (3.7%), and infrastructure goods, which rose at a three-month high of 4%. Capital goods’ output growth slowed to 3.1%, and production was 6.2% below September levels.

Moreover, 18 of the 23 manufacturing segments recorded a growth in output, the same as September, with five sectors recording a double-digit growth, including electrical equipment (33.1%), furniture (27.7%), and other transport equipment (17.4%). The number of segments with higher year-on-year output were just 12 in August, when the IIP had contracted fractionally.

“The improvement in growth of consumer goods output despite high inflation in October is quite an encouraging sign for consumption demand in the economy,” said Paras Jasrai, senior economic analyst at India Ratings and Research. He reckoned that the IIP may rise 4.5% in November.

Overall industrial output growth remains muted compared to 2023-24, when it had risen 7% in the first seven months of the year. So far this year, industrial production is up just 4%, with manufacturing rising 3.8%.