Industrial production growth picks up to 5.2% in January

IIP growth data: India’s factory output based on the Index of Industrial Production (IIP) rose to 5.2  per cent year-on-year in the month of January, Ministry of Statistics and Programme Implementation data showed on Friday. The industrial growth rate in January has been revised up to 5.2 per cent from 4.3 per cent in December. 

As pointed out by the ministry, the government has undertaken various steps to boost industrial performance. These include the introduction of Goods and Services Tax (GST), reduction in corporate tax, interventions to improve ease of doing business, measures for reduction in compliance burden, policy measures to boost domestic manufacturing through public procurement orders, Phased Manufacturing Programme (PMP) and FDI policy reforms. 

“The moderate IIP growth of 5.2% for January 2023 printed in line with our expectations (5.6%), with a healthy performance of primary, capital, and infra goods and consumer non-durables offsetting the marginal rise in intermediate goods and discouraging contraction in consumer durables. A portion of the continuing, albeit narrower contraction in consumer durables, stems from weak exports.” said Aditi Nayar, Chief Economist and Head, ICRA. 

However, economists highlighted the fact that concerns over global economic slowdown and elevated inflation remains tantamount to India’s growth story too. 

“Exports have been sharply hit as a result of the lackluster demand and is likely to remain worrisome in the coming months. This as result would also hit manufacturing growth, going ahead. Weakness in this sector was also witnessed as manufacturing PMI slowed down to 4-month low of 55.3 in Feb’23. Against the above backdrop, we expect IIP growth to be much lower than anticipated in H2FY24,” added Jahnavi Prabhakar, Economist, Bank of Baroda. 

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