New Delhi, March 11 (FN Bureau) India’s factory output measured by Index of Industrial Production (IIP) accelerated to 1.3 per cent in January, 2022 from 0.7 per cent in December 2021, government data showed on Friday. “Although Dec’21 IIP growth is revised up to 0.7 per cent (from 0.4 per cent reported earlier), favourable base helped it grow further to 1.3 per cent YoY in Jan’22 (-0.6% YoY in Jan’21). Overall, economic growth remains weak and there were no surprises in today’s data release,” said Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services. As per monthly data released by Ministry of Statistics & Programme Implementation (MoSPI), industrial output recorded 13.7 per cent year-on-year growth in April-January period of FY22. The manufacturing sector growth stood at 1.1 per cent in January 2022 while mining and electricity recorded 2.8 per cent and 0.9 per cent year-on-year growth respectively during this period.
Commenting on the January IIP numbers, Sunil Kumar Sinha, Principal Economist, India Ratings and Research said, “Though loss in growth momentum was expected due to the spread of omicron variant of COVID 19 pandemic, but inability of the industrial sector to recover on a sustained basis point towards deeper problem like weakness in demand and/or supply side issues. However, despite the dismal growth numbers the positive side of January 2022 industrial output is that in level terms it has remained higher than the pre-Covid levels.” As per use-based classification, growth of capital goods and consumer durables contracted in the month of January. The data showed primary goods production rose 1.6 per cent year-on-year during this period. While intermediate goods inched up slightly, infrastructure goods recorded 5.4 per cent growth. Production of consumer non-durables increased 2.1 per cent in January 2022. “Relative to the pre-Covid level of January 2020, the IIP displayed a mild 0.7 per cent rise, with lower output of consumer durables and non-durables as well as capital goods imposing a drag,” ICRA Chief Economist Aditi Nayar said. “Capital goods output has sustained an unpalatable contraction for the fourth consecutive month, although its pace eased in January 2022.
However, the pickup in growth of infrastructure/construction goods in January 2022 is promising after the contraction in construction GVA in Q3 FY2022,” she further said. On the outlook of the industrial production, Nayar said that despite the easing of restrictions after the subsiding of the third wave, high frequency indicators point to a mixed trend in February 2022. “Manufacturing is unlikely to rise as much as the surge in the daily average GST e-way bill generation in February 2022, especially given the weaker performance of the auto sector. With the modest uptick in electricity demand growth, amidst a dip in the YoY performance of Coal India Ltd, we expect the IIP growth to remain sub-2 per cent in February 2022,” she stated.