India’s Industrial Production Growth Moderates To 6.6% In July

India’s factory output declined slightly in July even as it continued to benefit from a low-base effect from last year when the industry was adjusting to the newly introduced goods and services tax regime.

The Index of Industrial Production rose 6.6 percent year-on-year in July, compared to a 1 percent rise in the same month last year, data released by the Ministry of Statistics and Programme Implementation showed. A Bloomberg poll of economists had projected a 6.5 percent growth. IIP growth for June was revised down to 6.9 percent from a four-month high of 7 percent initially.

• Mining output growth stood at 3.7 percent year-on-year compared with 4.5 percent in the same month last year.
• Manufacturing output rose 7 percent, compared with a 0.1 percent decline last year.
• Electricity generation stood at 6.7 percent, compared with 6.6 percent last year.

The factory output rebound witnessed in June was mainly because of the lower base from last year when manufacturing had taken a hit as dealers cut stock and put fresh orders on hold ahead of the GST rollout. Adjusting for the base effect, IIP growth would’ve been at 3.5-4 percent, Edelweiss Research had earlier said in a note. The base effect was likely to be supportive for another month and then would fade out, it added.

Twenty of the 23 industry groups in the manufacturing sector witnessed a positive growth, with the manufacture of furniture, manufacture of computer, electronics and optical products, and manufacture of tobacco products showing the highest growth.

The use-based classification showed that primary goods production rose 6.9 percent, capital goods rose 3 percent, while intermediate goods rose 1.2 percent over last year. The infrastructure and construction goods category saw a 8.4 percent rise in July.