India's industrial output growth, as measured by the index of industrial production (IIP), rose to 5.6 per cent in February from 5.2 per cent recorded in the previous month, the National Statistical Office (NSO) data showed.
For the 11-month period from April 2022 to February 2023, the industrial production growth stood at 5.5 per cent, which is less than half of 12.5 per cent recorded in the corresponding period of the previous year.
The February growth print looks good partly due to low base. The industrial production had posted a growth of 1.2 per cent in February 2022.
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The expansion in industrial production was led by the power sector. Electricity production jumped by 8.2 per cent year-on-year in February. For the first 11 months of 2022-23, electricity production was higher by 10 per cent when compared with the same period of the previous year.
Manufacturing, which has around 78 per cent weight in the IIP, posted a growth of 5.3 per cent in February, sharply higher than 3.7 per cent recorded in the previous month. Manufacturing growth stood at a paltry 0.2 per cent in February 2022.
Manufacturing growth was driven by a strong uptick in consumer non-durables. This signals resilience in domestic demand.
However, consumer durables – which are more sensitive to rising interest rates and cater to export demand – declined for the third consecutive month, said Dharmakirti Joshi, chief economist, CRISIL.
For the first 11 months of 2022-23, manufacturing production growth stood at 4.9 per cent as compared to 13 per cent expansion recorded in the corresponding period of the previous year.
Industrial and investment related goods, such as capital, infrastructure, and construction goods, continued to log strong growth, reflecting steady pickup in investment activity.
Mining output growth declined to 4.6 per cent in February from 8.8 per cent recorded in the previous month. For April-February period of the financial year 2022-23, mining output growth stood at 5.7 per cent as compared to 13.2 per cent recorded in the corresponding period of 2021-22.
In the current fiscal, industrial growth is expected to be hit by slowing global and domestic demand as elevated interest rates weigh on purchasing power.
However, a normal monsoon, as expected by the Indian Meteorological Department, could offer relief by bolstering rural income prospects. Overall, we expect India’s real GDP to grow 6 per cent during the fiscal compared with 7 per cent in fiscal 2023, Joshi said.