December 2024 IIP falls to 3.22%, on high base impact

14 Feb 2025 , 09:47 AM

DECEMBER 2024 IIP GROWTH SUBDUED AT 3.22%

The IIP growth tapered from 4.96% (revised lower from 5.17%) in November 2024, to 3.22% in December 2024. IIP is generally announced with a lag of one month. However, this fall is largely due to the high base effect between November 2023 and December 2023, when the IIP spiked from 2.47% to 4.39%. There were also two revisions to previous IIP data. The IIP growth estimate for November 2024 saw the first lower revision from 5.22% to 4.96%. At the same time, the final revision for September 2024 saw IIP growth upgraded from 3.09% to 3.23%. The August 2024 contraction has already been neutralized to zero growth.

IIP TROIKA – MINING, MANUFACTURING, ELECTRICITY

IIP is normally classified into 3 components; mining, manufacturing, and electricity. For December 2024; mining expanded by 2.6% and electricity production at 6.2%. However, the manufacturing growth fell from 5.5% in November to 3.0% in December 2024. With a weightage of 77.6% in the IIP basket; manufacturing pulled the overall IIP down.

What about the high frequency MOM IIP growth. For December 2024, the MOM mining output grew by 6.95%, manufacturing output expanded by 6.26% MOM, while electricity expanded by a more sedate 4.73% on an MOM basis. As a result, overall IIP also expanded by a healthy 6.14% MOM; indicating a sharp revival in short term IIP sentiments.

HOW IIP GROWTH EVOLVED OVER LAST 1 YEAR

After the low of August (back from negative to neutral), the IIP has been consistently building heft in the last 4 months; albeit there was the base effect in December 2024.

Month	IIP Growth (%)
Dec-23	4.39%
Jan-24	4.21%
Feb-24	5.60%
Mar-24	5.47%
Apr-24	5.19%
May-24	6.25%
Jun-24	4.93%
Jul-24	4.98%
Aug-24	0.00%
Sep-24	3.23%
Oct-24	3.66%
Nov-24	4.96%
Dec-24	3.22%

Data Source: MOSPI

There has been a perceptible shift in IIP growth to a lower trajectory. If you look at IIP growth in the last 5 months, it averaged 3.01%, while in the 7 months prior to that, IIP growth had averaged a much healthier 5.23%. Clearly, the global supply chain disruptions caused by the West Asian crisis and the recent Trump tariffs have hit demand and manufacturing growth in a significant way.

DECEMBER 2024 IIP: PRODUCT-WISE BREAK OF IIP BASKET

The table captures comparative IIP growth for last 4 months, with respective components. Overall numbers for mining, manufacturing, and electricity are segregated.

Product Basket	Weights	Sep-24	Oct-24	Nov-24	Dec-24
Manufacture of food products	5.3025	5.1	4.9	-3.5	-5.5
Manufacture of beverages	1.0354	0.2	3.6	-1.3	2.7
Manufacture of tobacco products	0.7985	1.6	11.6	0.8	7.7
Manufacture of textiles	3.2913	0.8	0.9	3.6	1.3
Manufacture of wearing apparel	1.3225	1.3	6.3	18.6	5.4
Manufacture of leather and related products	0.5021	-2.5	-3.8	-3.4	-7.0
Manufacture of wood products	0.1930	-1.3	10.0	12.1	17.2
Manufacture of paper products	0.8724	3.4	-0.3	2.2	-2.0
Printing and reproduction of recorded media	0.6798	-3.2	-9.7	-8.1	-9.2
Manufacture of coke and refined petroleum products	11.7749	5.2	5.6	2.0	3.9
Manufacture of chemical products	7.8730	4.7	2.1	3.2	2.2
Manufacture of pharmaceuticals	4.9810	1.3	1.9	2.9	-9.5
Manufacture of rubber and plastics products	2.4222	10.4	7.0	-1.5	-0.3
Manufacture of other non-metallic mineral products	4.0853	3.6	3.1	8.0	2.8
Manufacture of basic metals	12.8043	2.9	4.9	7.1	6.7
Manufacture of fabricated metal products	2.6549	2.5	8.1	17.3	9.4
Manufacture of computer, electronic and optical	1.5704	-1.8	0.6	19.9	2.6
Manufacture of electrical equipment	2.9983	18.6	33.1	36.1	40.1
Manufacture of machinery and equipment	4.7653	3.7	-2.4	7.9	10.5
Manufacture of motor vehicles, trailers	4.8573	1.6	-1.7	6.1	-1.8
Manufacture of other transport equipment	1.7763	13.9	17.4	10.3	3.5
Manufacture of furniture	0.1311	33.2	28.8	39.7	22.1
Other manufacturing	0.9415	2.9	-11.5	-13.5	10.1
MINING	14.3725	0.2	0.9	1.9	2.6
MANUFACTURING	77.6332	4.0	4.4	5.5	3.0
ELECTRICITY	7.9943	0.5	2.0	4.4	6.2
OVERALL IIP	100.0000	3.2	3.7	5.0	3.2

Data Source: MOSPI

The last column shows the most current IIP reading for December 2024. Let us first look at the positive drivers of IIP growth. The positive thrust is coming largely from sectors like electrical equipment, furniture, wood products, machinery & equipment, other manufacturing, fabricated metal products, and basic metals.

The negative pressure on IIP is coming from sectors like pharmaceuticals, printing & recorded media, leather products, and food products. To sum up, the story has shifted from weak export demand to weak domestic demand. However, the pressure on IIP appears to be more peripheral than structural; and that may be the good news for India Inc.

A QUICK LOOK AT THE ANNUALIZED IIP DATA

The latest fiscal year FY25 now has 9 months cumulative data from April to December 2024; which is sufficient to extrapolate a picture for FY25. The cumulative IIP growth for FY25 is at 4.0%. That is sharply lower than last 3 years, albeit on a higher base.

Product Basket	Weights	2021-22	2022-23	2023-24	2024-25
Manufacture of food products	5.3025	5.9	3.8	1.6	-2.2
Manufacture of beverages	1.0354	11.5	19.9	5.1	3.3
Manufacture of tobacco products	0.7985	8.7	-0.6	-8.3	1.7
Manufacture of textiles	3.2913	29.3	-8.7	0.1	0.7
Manufacture of wearing apparel	1.3225	27.4	-7.4	-14.1	8.6
Manufacture of leather and related products	0.5021	1.3	-5.8	-1.0	-2.0
Manufacture of wood products	0.1930	15.1	-0.8	-5.9	5.5
Manufacture of paper and paper products	0.8724	17.7	0.6	-3.6	0.0
Printing and reproduction of recorded media	0.6798	12.4	23.4	-1.4	-5.7
Manufacture of coke and refined petroleum	11.7749	8.9	5.7	3.9	3.2
Manufacture of chemicals and chemical products	7.8730	4.3	6.9	-1.5	2.3
Manufacture of pharmaceuticals	4.9810	1.3	-2.4	8.0	-1.3
Manufacture of rubber and plastics products	2.4222	8.0	0.5	4.4	4.5
Manufacture of other non-metallic mineral products	4.0853	20.1	6.6	6.5	2.4
Manufacture of basic metals	12.8043	18.6	8.1	11.6	6.5
Manufacture of fabricated metal products	2.6549	10.9	-1.6	8.3	7.3
Manufacture of computer, electronic and optical	1.5704	11.1	-6.4	-11.3	7.8
Manufacture of electrical equipment	2.9983	12.2	-4.2	7.5	24.8
Manufacture of machinery and equipment	4.7653	11.0	10.5	6.6	2.8
Manufacture of motor vehicles and trailers	4.8573	18.4	19.3	11.6	3.3
Manufacture of other transport equipment	1.7763	1.6	11.6	13.9	13.2
Manufacture of furniture	0.1311	23.3	16.4	-5.5	28.0
Other manufacturing	0.9415	49.0	-3.0	-6.2	-5.3
MINING	14.3725	12.2	5.8	7.5	3.3
MANUFACTURING	77.6332	11.8	4.7	5.5	4.0
ELECTRICITY	7.9943	7.9	8.9	7.1	5.4
OVERALL IIP	100.0000	11.4	5.2	5.9	4.0

Data Source: MOSPI (FY25 is 8-Months data)

What are the gaining and losing sectors on annualized IIP growth? Among the gaining sectors in IIP are furniture, electrical equipment, and transport equipment. Among the sectors under pressure are printing & recorded media, other manufacturing, food products, leather products, and pharmaceuticals. Exports appear to have taken a hit once again, and it remains to be seen, how the Trump tariffs have an impact on the IIP for FY25 overall.