India’s industrial production (IIP) grew 8.1 percent in October as against 4.5 percent in September, aided by a favourable base effect and robust output in all key sectors—manufacturing, electricity and mining, data released by the statistics office showed.
Factory output, measured by the Index of Industrial Production (IIP), is the closest approximation for measuring economic activity in the country’s business landscape.
IIP grew at barely 1.8 percent in October, 2017.
According to ratings agency ICRA, the pickup in industrial growth in October is likely to be temporary, as portended by a considerable deterioration in the performance of indicators such as auto production, electricity generation and Coal India’s output during November.
Manufacturing sector output, which accounts for more than three-fourths of the entire index, grew 7.9 percent in October from 4.6 percent a month ago and 2 percent a year ago.
Electricity production growth grew to 10.8 percent in October from 8.6 percent a month ago and 3.2 percent a year ago. Mining activity bounced back and jumped 7 percent in October from was at 0.2 percent in September from a de-growth of (-) 0.2 percent last year.
“Electricity volume growth has re-entered double-digit territory after a gap of over two years and the consumer goods segment also gained from the favourable base, with both durables and non-durables on a healthy uptrend,” B Prasanna, Head, Global Markets Group, ICICI Bank said.
Consumer durables output also grew 17.6 percent, from 5.2 percent in September, indicating higher production during the festive season. Consumer non-durables grew 7.9 percent in October as compared to 6.1 percent in the previous month.
“To an extent, both capital goods and consumer durables benefited from the high growth of auto production in October 2018, which has faded in November 2018 to pare accumulated inventories,” Aditi Nayar, Principal Economist at ICRA said.