October 13 2017

Industrial Production India

Industrial output of India rises by 4.3% YoY in August from a 0.9% growth in the previous month.

Published monthly by Ministry of Statistics and Programme Implementation(MOSPI). Updated till the month of August 2017.(Published on October 12th, 2017)

Recent Data Trend

Industrial production in India rose by 4.3% year on year in August 2017. This is the highest growth rate since April 2017. The revised figures of the previous month show a growth of 0.9% YoY in industrial production. The growth in August was boosted by the 4.9% YoY increase in the eight core industries, which constitutes about 40% of the index.

Among the components of industrial production, manufacturing grew by 3.1% YoY after falling by 0.3% in the previous month. The growth in manufacturing is led by growth in manufacturing of computer and electronic products and the pharmaceutical industry. Additionally, mining and electricity, which has 14.3% and 7.9% weight in the index respectively, grew by 9.4% and 8.3% YoY.

According to the use-based classification, production of capital rose by 5.4% YoY, after shrinking for four consecutive months. Production of primary and infrastructure goods rose by 7.1% YoY and 2.5% YoY respectively.

The growth in manufacturing indicates a turn around in production after the slowdown caused due to destocking by firms prior to Goods and Service tax (GST) rollout. The factory managers are now more eager to resume production after they have a clearer understanding of the new tax regime. At the same time, we must also notice that manufacturing actually has been contracting for the past two months i.e. for June and July. As industrial production consists a large portion of GDP, a significant rebound is necessary for a pick up in the GDP growth, which recently tumbled to a three year low of 5.7% YoY.

An increase in production will require increased investment by the corporates. The RBI decided to keep the policy rate unchanged in its policy review in October. In the light of declining credit to the industry by the SCBs and increasing debt of the corporates. The Monetary Policy Committee(MPC) of the RBI also stated that it is imperative to reinvigorate investment activity which will drive up production, thus fuelling the GDP growth.

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 important measure of growth as it records the level of industrial activity of the economy.

For more information visit the official government website

IIP- Use based classification

Next release date:  November 10th, 2017