Indicating a slowing growth ahead, India’s industrial growth, as measured by the Index of Industrial Production, declined to 2.4 per cent in November 2023, shows data released on Friday by the Ministry of Statistics and Programme Implementation, with lesser working days on account of Diwali impacting production. The IIP fell sharply from 11.6 per cent in October 2023 and within this, manufacturing IIP saw a sharper slowdown to 1.2 per cent from 10.2 per cent.
This is the slowest pace in 8 months. In November 2022, India’s industrial output had grown by 7.6 per cent and during April-November 2023, IIP growth stood at 6.4 per cent as against 5.6 per cent in the corresponding period of FY23.
The slowdown was broad-based across all sectors, with consumer goods and capital goods recording the weakest growth with declining IIP of consumer durables and non-durables driven by an unfavourable base.
According to Aditi Nayar Chief Economist ICRA Ratings, the IIP growth was an expected crash, printing close to ICRA’s forecast of 2.2 per cent. Nayar attributes the slowdown to the reversal in the base effect related to the change in the festive calendar.
Looking ahead, the mixed YoY performance of the available high frequency indicators in December 2023 relative to November 2023. suggests that the YoY IIP growth will improve only somewhat to 3-5 per cent in that month, shows ICRA report.
Dipti Deshpande, Principal Economist, CRISIL notes that the first advance estimates of GDP also bake in slower growth in the second half of this fiscal. “While GDP growth is expected to slow to 6.9 per cent in the second half from 7.7 per cent in the first half, manufacturing growth as per the estimates will see a sharper slowdown to 3.8 per cent from 9.3 per cent,” forecasts Deshpande, who feels that the upcoming Budget will be monitored for how it alters the Government’s investment push to growth.
