India's factory output at a nine-month low of 1.4% in November 2021

13 Jan 2022 , 09:00 AM

India’s Industrial Production (IIP) growth pulled back to 1.4% in November 2021 compared to 4% growth in the previous month. The quick estimates of the index stood at 128.5. The factory output is at nine months low in November this year.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for November 2021 stand at 111.9, 129.6 and 147.9 respectively. These Quick Estimates will undergo revision in subsequent releases as per the revision policy of IIP.

As per Use-based classification, the indices stand at 126.5 for Primary Goods, 81.2 for Capital Goods, 141.8 for Intermediate Goods and 142.5 for Infrastructure/ Construction Goods for November 2021.  Further, the indices for Consumer durables and Consumer non-durables stand at 106.7 and 150.3 respectively for November 2021.

The Quick Estimates for November 2021, the first revision for October 2021 and the final revision for August 2021 have been compiled at weighted response rates of 88 percent, 92 percent and 94 percent respectively.

CARE Ratings in its latest report said that “the disappointing growth print is despite some support from a negative base of last year in the same month. Negative growth in the capital and consumer goods segment, which is representative of a revival in demand, has restricted the overall growth in industrial output. There has been a broad-based slowdown in growth momentum across sectors. Also, the nine-month low core sector output growth of 3.1% YoY in November 2021 indicates towards the poor show of major sectors during the month.”

Going forward, CARE’s note said that “lingering virus concerns have dampened the consumer sentiments. This adds to the already existing issues of elevated input costs and raw material shortages. Hence, the outlook for the overall industrial activities appears feeble and will depend largely on the severity of the new virus variant. Also, waning base effect will continue to pull the growth number down. Factoring these developments, we expect IIP growth to remain sluggish in the range 2-3% for the next three months.”

Aditi Nayar, Chief Economist, ICRA Limited, “the IIP displayed an expected moderation to a feeble nine-month low growth of 1.4% in November 2021, with the impact of the slackening momentum after the festive season compounded by the disruption caused by heavy rains in South India, amid the continuing issues afflicting the auto sector. The dip in industrial growth was broad-based across the three sectors and six categories, with capital goods and consumer durables displaying an even deeper YoY contraction in November 2021.

Discouragingly, mining and manufacturing output slipped below the pre-covid level in November 2021, with the latter led by capital goods and consumer durables, in line with the MPC’s prescient view that the economic recovery had not attained durability.