Industrial Production India

Manufacturing supports strong growth in industrial output in January

Published monthly by Ministry of Statistics and Programme Implementation(MOSPI). Updated until the month of January 2018.(Published on March 12th, 2018).

Recent Data Trend

In January 2018, industrial production charted a growth of 7.5% year on year (YoY), beating market expectations of 6.4% (Bloomberg poll). The expansion in January is a welcoming news as it took place despite an unfavorable base effect. The recovery in factory output was driven by manufacturing and electricity generation.

Electricity generation reached a 14-month high of 7.6% YoY in January. As per Ministry of Power, the electricity generation target of conventional sources for the year 2017-18 has been fixed at a growth of around 5.97% over the actual conventional generation for the previous year (2016-17).

Manufacturing growth continued to reflect a steady increase and stood at 8.7% YoY, from 8.5% YoY in December. Also, sixteen out of twenty-three industry groups in the manufacturing sector posted positive growth. The top three contributors in this sector were transport equipment, motor vehicles (two-wheelers) and pharmaceuticals (digestive enzymes).

In terms of use-based classification, capital goods production posted its third consecutive double-digit growth, albeit a slight moderation from December 2017. The surprise element in January print is the pickup in growth of consumer durables. Stripping away the base effect, it stood at more than a year high of 6.5% YoY, following a poor run since FY 2017.

In our view, the strong improvement in IIP will provide a positive push to the March GDP print. The third quarter GDP figures were mainly supported by investment demand, and a strong growth in capital goods in the next two-three months' will ensure a likewise contribution ahead. Additionally, a sustainable pickup in credit to the industry will act as a positive trigger for improving the overall credit-investment scenario.

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: April 12th, 2018

Industrial Production-Quarterly