India’s industrial production expands to six-month high of 5.2% in November
- India's industrial production rose to a six-month high in November 2024, driven by a significant growth in the manufacturing sector.
India's industrial output surged to a six-month high of 5.2% annually in November, driven by strong gains in the manufacturing sector.
Manufacturing output rose 5.8% in November, while electricity generation and mining activity grew by 4.4% and 1.9%, respectively, according to the latest data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday.
During October, manufacturing expanded by 4.4%, electricity generation by 2%, and mining activity by 0.9%.
Economists polled by Reuters had expected industrial output to register a growth of 4.1% in November.
Despite the November rebound, industrial output growth for the April-November period stood at 4.1%, lower than the revised 6.5% growth recorded during the same period last year.
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The uptick in industrial activity could provide a boost to India’s economic outlook, particularly as global economic uncertainties persist.
However, the annual slowdown underscores the challenges the industrial sector faces in sustaining momentum.
The manufacturing sector has performed strongly, growing by 5.8% compared to 1.3% last year, driven by a low base effect and a revival in capital goods and consumer durable goods, said Madan Sabnavis, chief economist at Bank of Baroda.
"Quite clearly the needle appears to have turned during the festival season, which is a good sign," he said.
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"We need to see if this can be sustained in the coming months as this will help boost the GDP growth number for the year where manufacturing sector growth has been subdued at 5.3%. Cumulative growth has been 4.1%, and if this tempo is maintained, growth can end between 5.0-5.5% for the year," he added.
India’s gross domestic product (GDP) growth in the September quarter fell to 5.4%, the slowest in nearly two years.
During this period, private consumption growth moderated, while manufacturing and construction also saw a slowdown.
Meanwhile, capital goods production, a proxy for fixed investments in the economy, grew 9% in November, against a 1.1% contraction in the year-ago period.
Alongside, consumer durables production, which highlights consumer sentiment, grew 13.1% annually during the month, against a contraction of 4.5% in the year-ago period.
"Given the base effects related to the shifting festive dates, average growth over October-November tends to provide a better gauge of the underlying momentum. By this yardstick, overall industrial growth was modest at 4.4%, driven by consumer durables (9.2%) and infra/construction goods (7.3%), with a distinctly lacklustre performance of primary goods (2.6%) and consumer non-durables (1.5%),” said Aditi Nayar, chief economist and head – Research & Outreach at ICRA Ltd.
"ICRA expects the IIP growth to moderate to ~3-5% in December 2024 (+4.4% in December 2023) from 5.2% in November 2024 (+2.5% in November 2023), partly on account of an unfavourable base," Nayar said.
The industrial output growth rate, which was at 5.2% in April this fiscal, maintained its momentum and staged growth every month, except for August, when it contracted, and has seen a rebound since then on the back of festival demand for manufactured items and electricity generation.
According to the first advance estimate data released earlier this week, India's GDP (gross domestic product) growth is expected to slow to 6.4% for FY25, registering the slowest pace of growth in four years since the covid pandemic hit, when GDP growth contracted 5.8% (in FY21).
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India’s GDP growth has struggled this year chiefly because of persistent inflation, weak urban consumption, disappointing private sector investments, sluggish manufacturing activity, and lower government spending during Q1 due to elections.
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Business NewsEconomyIndia’s industrial production expands to six-month high of 5.2% in November
First Published:10 Jan 2025, 04:13 PM IST
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