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India's factory output, measured through the Index of Industrial Production (IIP), witnessed a growth of 3.1% in September, data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on Friday. The growth was primarily owing to a rise in manufacturing and mining outputs.

The IIP had grown 4.4% in September 2021. The IIP had contracted (-)0.8% on-year to 131.3 in August. In July 2022, the IIP had risen by 2.2%.

According to the government data, the output of the manufacturing sector rose 1.8% in September 2022 as against an 4.3% growth recorded in the year-ago period, as per latest data from the National Statistical Office (NSO).

Mining output went up to 4.6%. Power generation, on the other hand, was up 11.6% during the month.

IIP is an index that details the growth of various sectors in the economy. This macroeconomic data shows the state of various critical economic sectors.

The performance of the core industries is key to industrial growth as they make up around 40% of the IIP. These are electricity, steel, refinery products, crude oil, coal, cement, natural gas, and fertilizers.

“A revival of 3.1% in Industrial production growth is a strong indication of improving output and demand condition in the economy. The boost to industrial production in September is coming from a significant growth in capital and infrastructure output," said Vivek Rathi, Director-Research, Knight Frank India. 

Rathi, however, said that a revival in manufacturing output is moderate and is yet to a show significant recovery. "Going forward, strong manufacturing sector performance as witnessed in expansionary manufacturing PMI and improving capacity utilisation provides more impetus to the manufacturing output which would boost industrial production. Also, cues from post Diwali season sales sustenance of manufactured products and RBI action in December on credit flow and interest rates will hold the key for industrial production," he added.

The Central Government will release the consumer price index (CPI) and wholesale price index (WPI) data for October on Monday.

India's retail inflation likely cooled to 6.7% in October from September’s five-month high of 7.41% due to a favourable base effect in some key components such as food prices, as per a Mint poll of 22 economists.

ABOUT THE AUTHOR

Meghna Sen

Meghna Sen is a deputy chief content producer at Livemint where she tracks companies, markets, news. She has 5+ years of experience with online and print publications. Email: meghna.sen@htdigital.in
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