Industrial Production India

Industrial production falls to 0.5% YoY in Nov'18, a slowest since Jun'17.

Published monthly by Ministry of Statistics and Programme Implementation(MOSPI). Updated until the month of November 2018. (Published on January 11th, 2019).

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

Recent Data Trend

The index of industrial production recorded a growth of 0.5% Year-on-Year (YoY) in Nov'18, a slowest since Jun'17, as against an eleven-month high growth of 8.1% YoY in the previous month. The abrupt slowdown is largely due to a sharp contraction in manufacturing sector along with unfavorable base effect. The growth is far below the market expectation of 3.5% YoY (Bloomberg poll).

The manufacturing activity which constitutes more than three-fourths of the entire index contracted by 0.4% YoY in Nov'18, compared to positive growth of 7.9% YoY in Oct'18. The contraction can be attributed to poor performance of the automobile sector and MSMEs (which accounts for about 45% of manufacturing output) due to a liquidity crunch in the economy led by a slowdown in NBFCs. In the category of manufacturing only 10 out of 23 industry groups showed positive growth during Nov'18.

The eight core industries output, which constitutes more than 40% of industrial production, had already depicted a slowdown in Nov to a 17-month low of 3.5% YoY.

As per use-based classification, the capital goods production, which indicates investment in the economy contracted by 3.4% in Nov'18. Even the consumer durables declined by 0.9%, signaling weakness in consumption. Primary and infrastructure goods are the only use based category supporting industrial production with the positive growth rate of 3.2% and 5%, respectively.

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. A steep contraction in manufacturing suggests that CSO advance estimate of 8.3% for the manufacturing sector in FY19 is little optimistic. In addition, weakness in both investment and consumption activity will certainly pull down the GDP growth in the Oct-Dec quarter.

With a weak industrial production and falling inflation rate, a policy rate cut is highly likely in RBI's February policy meet.

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: February 12th, 2019

Industrial Production-Quarterly

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

Industrial Production-Annual