India’s industrial output, measured as index of industrial production (IIP), grew to 5.2 per cent in January 2023, up from 4.3 per cent in December 2022, continuing its expansion for the third consecutive month, the data released on March 10 by the Ministry of Statistics and Programme Implementation showed. The figure was expected to edge up as the data of eight core sector industries released on February 28 showed that they had grown by 7.8 per cent in December and accounted for 40 per cent of the industrial output.
IIP is used to measure the manufacturing activity in various sectors of an economy and measures the amount of industrial production for the period under review in comparison with a reference period.
Industrial output in January was higher than predicted by all the polls and forecasts, which pegged the figure at around 5 per cent, compared to 4.3 per cent month-on-month.
Riding on Power, Mining, Manufacturing
The higher IIP growth rate in January was the result of better production numbers of two to three sectors such as power, mining and manufacturing. In January, manufacturing output was up by 3.7 per cent from 3.1 per cent in December; electricity production was higher by 12.7 per cent as against an increase of 10.4 per cent in the last month of 2022. However, mining sector output increased by 8.8 per cent, down from 10 per cent growth witnessed in December.
“The 5.2 per cent growth in IIP for the month of January has come slightly further from the estimates of 5.0 per cent. The average since April 2022 has been 5.4 per cent and therefore the January number has come quite close to the average. It is a significant improvement from the 4.3 per cent figure in December,” said Mohit Ralhan, chief executive officer, TIW Capital.
According to Ralhan, the IIP growth in India has been an average of 6.05 per cent between 1994 and 2022 and from this perspective there is still some headroom for it to grow further from here on, especially in manufacturing which increased only by 3.7 per cent in the month of January.
The data released on Friday also showed that the consumer durables output declined by 7.5 per cent compared to a contraction of 4.4 per cent a year ago. On the other hand, consumer non-durable goods output expanded by 6.2 per cent against a growth of 23.1 per cent earlier. For the first 10 months of the current fiscal, between April and January, the growth in IIP stood at 5.4 per cent, down from 13.7 per cent in the year-ago period.
The core infrastructure industry’s output grew by 7.8 per cent year-on-year in January as against 7 per cent in December last year and 4 per cent in the January last year. The data showed that the production of fertilisers, coal, electricity, steel, natural gas and cement and refinery products increased in January 2023 over the corresponding month of last year that led to a growth in the factory output.
Similarly, manufacturing PMI rose modestly to 55.4 in January from 57.8 month-on-month. For the month of December 2022, the mining sector grew by 9.8 per cent compared to 9.7 per cent in the previous month, while the manufacturing sector witnessed 2.6 per cent growth compared to 6.1 per cent in the previous month. The electricity sector grew by 10.4 per cent compared to 12.7 per cent in the previous month.