After November revival, IIP growth may have stayed high in December

After rising by a 17-month high of 8.4 per cent in November, growth in the Index of Industrial Production (IIP) could stay high in December as well, say two items of analysis. 

An analysis of lead indicators by ratings agency ICRA says IIP growth might be above eight per cent in December. An analysis by SBI Research says industrial production might rise robustly in December but come down to a little over six per cent, before cooling to a little over four per cent in January. “We believe the economy is now in gradual recovery. The 8.4 per cent IIP growth in November is possibly no flash in the pan and a six-plus per cent growth in December as per the SBI Index not be ruled out,” said SBI group Chief Economist Soumya Kanti Ghosh. The yearly SBI Composite Index stood at 52.1 points (moderate growth) for January, compared to 53.1 (moderate growth) in December. ICRA’s assessment is that 11 of 16 indicators improved in December year-on-year, compared to November. Eight of these — including automobile production, rail freight, fuel consumption, bank credit — benefited from a favourable base effect. The growth figure also reflects a catch-up following subdued volume trends in the first half, it said. 

IIP, after slowing for two months, bounced back in November, signalling that industrial revival was back on track. The month’s growth was fuelled by a 10.2 per cent rise in the manufacturing sector from a low 2.2 per cent in October.