TLI Staff
New Delhi: India’s factory output measured by Index of Industrial Production (IIP) grew 4.3% year-on-year in the month of December 2022, data released by Ministry of Statistics and Programme Implementation (MoSPI) showed on Friday.
The data showed manufacturing sector growth remained weak during this period reflecting weak exports.
As per the official data, manufacturing sector recorded a growth of 2.6% in December. Electricity sector recorded a healthy year-on-year growth of 10.4% while mining sector output grew 9.8%.
Commenting on the IIP data, ICRA Chief Economist Aditi Nayar said, “The YoY growth of most available high frequency indicators improved in January 2023 relative to December 2022, partly reflecting a favourable base owing to the onset of the third wave of Covid-19 witnessed in January 2022, based on which we expect the overall IIP growth to rise to 5-7% in the month,”
Nayar added that disaggregated use-based data remains decidedly uneven, ranging from contractions in intermediate goods and consumer durables to a robust 7-9% expansion for the remaining four categories.
As per use-based classification, primary goods recorded 8.3% year-on-year growth while capital goods output grew 7.6%. Intermediate goods output was in red zone with 0.3% decline. Infrastructure/construction goods posted 8.2% growth in December 2022 while consumer durables contracted 10.4% during this period.
Consumer non-durables output grew 7.2% year-on-year in December, 2022.
“Infrastructure/construction goods output grew by 8.2% in Dec’22 and had grown consistently in the preceding months as well, undeterred by sharp rise in raw material prices and interest rates. Going forward, construction sector which includes both real estate as well as infrastructure would be the key to India’s economic growth,” said Vivek Rathi, Director Research, Knight Frank India.
He added, “The union government’s significant capex push especially to infrastructure should aid production of construction goods. However, for the long term sustained economic growth, consumption demand is needed to strengthen. Thus, 10.4% contraction in consumer durable output is concerning.”
The quick estimates of IIP are released usually on 12th of every month with a six weeks lag and compiled with data received from source agencies, which in turn receive the data from the producing factories/establishments.