New Delhi, Feb 11 (FN Agency) India’s factory output grew marginally at 0.4 per cent year-on-year in December, 2021 as compared to 2.2 per cent in the same month of the previous year. The marginal uptick is partly due to unfavourable base and weak performance by manufacturing sector. As per data released by Ministry of Statistics & Programme Implementation (MoSPI) on Friday, manufacturing output contracted by 0.1 per cent year-on-year. The mining output grew by 2.6 per cent during December while electricity output increased 2.8 per cent year-on-year. On cumulative basis, factory output measured by Index of Industrial Production (IIP) grew 15.2 per cent year-on-year during April-December period.
“Belying our expectation of a mild uptick, the YoY IIP growth crumbled to a marginal 0.4 per cent in December 2021, partly on account of an unfavourable base. The contraction in capital goods, consumer durables and consumer non-durables, along with a feeble growth in the remaining categories ranging from 0.3 per cent to 2.8 per cent in December 2021, add heft to the MPC’s (Monetary Policy Committee) decision to remain growth supportive in light of the incomplete recovery,” said ICRA Chief Economist Aditi Nayar. As per the use-based classification, capital goods output declined 4.6 per cent year-on-year in December.
Consumer durables and consumer non-durables also fell marginally during this period. Growth of primary, intermediate and infrastructure goods were slightly up during this period. “The Index of Industrial Production has continued to decelerate in December, in response to Omicron related disruptions. This is broadly in line with slowdown that we have seen in some other high frequency economic indicators for the last few months. It is specifically concerning that consumer goods, both durables and non-durables, have recorded a YoY fall in December. This further highlights the need for consumption boost in the economy,” said Rajani Sinha, Chief Economist & National Director (Research), Knight Frank India. However, it is to be noted that on a sequential basis (month on month) there has been a growth of 7.5% in the IIP. Going forward, the IIP numbers are likely to improve as Omicron related concerns abate, she added. The IIP numbers indicate that economic recovery still needs continuous support for durable growth. Further, there are a host of potential downside risks including another pandemic wave that could slow the growth momentum going forward.