Industrial growth slumps to 2.4% in November

India’s industrial growth rate slumped to an 8-month low of 2.4 per cent in November from a 16-month high of 11.6 per cent in October, data released by the Ministry of Statistics and Programme Implementation on Friday showed.

In November 2022, the country’s industrial production had grown by 7.6 per cent.

The growth rate for November was dragged down by the manufacturing sector, which slowed to a crawl of 1.2 per cent on a year-on-year basis after having posted an increase of 10.2 per cent in October.

The electricity generation also grew at a slower pace of 5.8 per cent as compared to a high double digit growth of 20.4 per cent in October. Similarly, the mining output growth declined to 6.8 per cent from 13.1 per cent in October.

The sharp slowdown in manufacturing output growth, which accounts for more than three-fourths of the index of industrial production (IIP), was partly attributed to the large number of holidays in November on account of festivals due to which the working declined.

For April-November 2023, IIP growth now works out to 6.4 per cent which is higher than the 5.6 per cent growth in the first eight months of 2022-23.

“Industrial output for Nov-23 has disappointed even factoring in the impact of the festival holidays during the month and the adverse base factor. IIP has recorded a modest growth of 2.4 per cent YoY, the lowest print in eight months since Mar’23,” Acuite Ratings & Research’s Chief Economist & Head of Research Suman Chowdhury said

The IIP figure has been pulled down by the manufacturing sector which posted the lowest annualised growth of 1.2 per cent in 13 months after a solid momentum in the early part of the fiscal. While moderation in industrial activity is typically seen in the post-festive season, this may also be an indication of an expectation of demand slowdown in the last quarter of the fiscal, he added.

There has also been a contraction in both consumer durables and non-durables output in Nov-23, leading to an overall contraction of 4.2 per cent YoY in the consumer goods sector.

“Notwithstanding the sharp downward adjustment in the IIP growth in Nov-23, the cumulative industrial output growth in the Apr-Nov’23 period stood at 6.4 per cent and we expect that figure to be higher than 6.0 per cent for the whole fiscal. However, the data on IIP is possibly an early indicator of the expected moderation in growth in the fourth quarter of FY24.

“While we have revised our GDP growth forecasts for FY24 to 6.8 per cent, we expect the growth trajectory to slow down gradually over the next few quarters,” Chowdhury added.