Workers carry an iron pipe on their shoulders at a steel and iron market area in India. (Photographer: Prashanth Vishwanathan/Bloomberg)  

India’s IIP Growth Sees Unexpected Slowdown In January

India’s industrial production declined slightly in January, contrary to analyst expectations.

The Index of Industrial Production rose by 1.7 percent in January 2019, compared with 7.4 percent growth in the year-ago period, according to data released by the Ministry of Statistics and Programme Implementation. A Bloomberg poll of 25 economists had projected a growth of 2.1 percent.

Industrial growth stands at 4.4 percent in the April-January 2019 period compared with the year-ago period.

  • Manufacturing output expanded 3.9 percent on a yearly basis.
  • Mining output grew 1.3 percent year-on-year in January.
  • Electricity generation rose 0.8 percent in January. It grew 7.6 percent in the year-ago period.
This (slowdown) might have been due to slowing government’s capital goods spends in January, and which is likely to slow even more in February and March.
Saugata Bhattacharya, Chief Economist, Axis Bank.

Eleven of the 23 industry groups in the manufacturing sector witnessed positive growth, with the manufacture of apparel, food products, and printing seeing the strongest sentiment. On the other hand, furniture, paper products and fabricated metal products, excluding machines and equipment, declined the most.

Use-based classification of goods suggest that growth of capital goods and intermediate goods sectors slowed.

  • Primary goods output rose 1.4 percent in January versus 1.2 percent fall in December.
  • Capital goods output contracted 3.2 percent in January compared with 12.4 percent rise in January 2018. The “unexpected” slowdown in capital goods is a concern, says Saugata Bhattacharya, Chief Economist at Axis Bank.
  • Infrastructure goods production rose 7.9 percent compared with 10.1 percent in December.
  • Output of intermediate goods contracted 3 percent in January compared with 5.4 percent rise in the year-ago period.
  • Consumer durables’ output rose 1.8 percent compared with 7.6 percent rise in January 2018.
  • Non-consumer durables’ output rose 3.8 percent compared with a 10.7 percent expansion in the year-ago period.