SME Times News Bureau | 11 Jan, 2019
India's industrial output growth rate slowed to 0.5 per
cent in November, its lowest rise since June 2017, according to official
figures released on Friday.
A decline in the manufacturing sector especially that of
capital goods, contributed to this decline.
Industrial production had recorded a rise of 8.4 per cent in October and 8.5
per cent during the corresponding period of the previous fiscal.
As per the data furnished by the Central Statistics Office (CSO), the output
rate of the manufacturing sector fell by (-) 0.4 per cent in November from a
year-on-year rise of 10.4 per cent.
"The 'Quick Estimates of Index of Industrial Production' (IIP) with base
2011-12 for the month of November 2018 stands at 126.4, which is 0.5 per cent
higher as compared to the level in the month of November 2017," the CSO
said in a statement.
"The cumulative growth for the period April-November 2018 over the
corresponding period of the previous year stands at 5 per cent."
On a YoY basis, mining production edged-up by 2.7 per cent and the sub-index of
electricity generation increased by 5.1 per cent.
Among the six use-based classification groups, the output of primary goods
which has the highest weightage of 34.04 grew by 3.2 per cent. The output of
intermediate goods, which has the second highest weightage, fell by (-) 4.5 per
Similarly, output of consumer non-durables inched lower by (-) 0.6 per cent and
that of consumer durables by (-) 0.9 per cent.
In addition, output of infrastructure or construction good increased by 5 per
cent, however that of capital goods by (-) 3.4 per cent.
"In terms of industries, ten out of the twenty three industry groups in
the manufacturing sector have shown positive growth during the month of
November 2018 as compared to the corresponding month of the previous
year," the statement said.
"... The industry group 'Manufacture of fabricated metal products, except
machinery and equipment' has shown the highest negative growth of (-) 13.4 per
cent followed by (-) 9.6 percent in 'Manufacture of electrical equipment' and
(-) 7.3 in 'Other manufacturing'."
According to Sunil Kumar Sinha, Director - Public Finance and Principal
Economist, India Ratings and Research: "Factory output growth after
averaging 5.6 per cent till October in FY19 suddenly dipped to 0.5 per cent in
November 2018. This is the worst growth performance of IIP since June 2017 when
factory output had contracted by 0.3 per cent in response to the roll out of
GST from July 2017."
"But for the support coming from infrastructure and primary goods the
industrial growth in November 2018 would have been negative as all other use
based sectors namely capital goods, intermediate goods, consumer durables and
consumer non-durables witnessed contraction in November 2018."
Yes Bank's Chief Economist Shubhada Rao said that "adverse base and the
post festive winding down of momentum along with fewer working days" was
expected to lower the IIP growth.
"Tighter domestic financing conditions may also have played a part. Going
forward, incrementally improving liquidity, normalisation post festive related
disruptions and election related spending could get growth supportive enabling
higher prints versus today's IIP number," Rao said.
"However H2 average growth will be lower than H1, as also corroborated by
advance estimates of GDP."