India's industrial production index grows by 3.8% in December 2023

India's index of industrial production (IIP) grew at a faster-than-expected pace of 3.8 per cent in December 2023. For December, economists polled by Reuters had estimated growth of 2.4 per cent. In November, too, it rose 2.4 per cent.

Manufacturing output, which accounts for 78 per cent of total production, advanced by 3.9 per cent, accelerating from a 1.2 per cent gain. On the other hand, output eased for mining (5.1 per cent vs 7 per cent) and electricity (1.2 per cent vs 5.8 per cent). Considering the April-December period, industrial production rose by 6.1 per cent. 

"Consumer goods - both durable and non-durable - have registered positive growth rates which are good signs," Madan Sabnavis, an economist at Bank of Baroda said.

During the month, consumer durables grew 4.8 per cent, while consumer non-durables grew at 2.1 per cent. 

Electricity generation in December was up 1.2 per cent, slower than 10.4 per cent growth in the corresponding month a year earlier. Mining activities increased by 5.1 per cent, compared to a 10.1 per cent rise in the same month a year earlier, the data showed.

Industrial output in the first nine months of the fiscal year that started in April was up 6.1 per cent from the same period a year earlier. 

Aditi Nayar, chief economist at ICRA, said she anticipates a modest rise in the industrial output growth to 4-6 per cent in January.

In November, the IIP growth had declined to 2.4 per cent from 11.7 per cent in October, according to government data. The industrial production growth decelerated mainly due to poor showing by the manufacturing sector. 

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The factory output growth measured in terms of the Index of Industrial Production (IIP) was 7.6 per cent in November 2022. The previous low of IIP growth was recorded at 1.9 per cent growth in March 2023. The IIP growth at 2.4 per cent in November is the lowest so far in the current fiscal.

(With inputs from Reuters)