Industrial Production India

Industrial output growth drops to 1.7% YoY in Jan'19 due to lower manufacturing growth.

Published monthly by Ministry of Statistics and Programme Implementation(MOSPI). Updated until the month of January 2019. (Published on March 12th, 2019).

Note: The MoM% has been calculated over the seasonally-adjusted series.

Recent Data Trend

India's factory output growth as measured by Index of Industrial Production (IIP) slowed down to 1.7% YoY in Jan'19, after a brief revival in the previous month to 2.4% YoY. The growth of the industrial sector was lower than the market expectation of 2.1% YoY (Bloomberg poll). Tepid growth in the manufacturing sector and in particular capital and consumer goods sector led to the overall pull in industrial growth.

The decline in the industrial output is in line with the decline seen in the core sector growth in Jan'19 of 1.8% YoY. The reasons for declining core sector output was on account of contraction in crude oil, refinery and electricity output.

Out of the three key indices of industrial production, manufacturing sector constitutes more than three-fourths of IIP. Manufacturing sector growth stood at 1.3% YoY in Jan'19 as against 2.7% YoY in the last month. Besides a higher base effect, lower production by the manufacturing sector can be attributed to the decline in growth. Subdued consumer demand for both durables and non-durables since Oct'18 has led to higher stock build-up leading to less production in January. Out of the 23 industries, only 11 registered positive growth. Electricity production also witnessed a depressed growth of 0.8% YoY as against 4.4% YoY in Dec'18.

Within the use-based classification, capital goods and intermediate goods contracted by 3.2% YoY and 3.0% YoY respectively. Lower capital expenditure from the government along with a decline in private investment, slow export growth and tighter funding conditions led to the contraction in capital goods production.

An unexpected fall in growth of industrial production, despite the higher base effect, led by a contraction in manufacturing activity is a matter of concern for the economy. The CSO has lowered the revised estimates for the manufacturing sector growth to 8.1% from 8.3% in the second advance estimates for FY19. This will certainly have an adverse impact on employment generation in the country. In addition, weakness in both investment and consumption activity may certainly pull down the GDP growth in the last quarter.

Brief Overview

Index of Industrial production is published by the Ministry of Statistics and Programme Implementation every month. The current base year of the index is 2011-12=100. The index shows the changes in the production volume of different industrial commodities. The sub-components of IIP are- Mining, Manufacturing, and Electricity. The IIP is also classified according to its use namely, Primary Goods, Capital Goods, and Intermediate Goods. It is an essential measure of growth as it records the level of industrial activity in the economy.

For more information visit the official government website

IIP- Use based classification

Next release date: April 12th, 2019

Industrial Production-Quarterly

Note: The QoQ% has been calculated over the seasonally-adjusted series.

Industrial Production-Annual