IIP growth turns positive, expands by 1.8 pc in Nov

Having contracted for three months in a row, the Index of Industrial Production (IIP) recorded a growth of 1.8 per cent in November mainly on account of improvement in the manufacturing sector, said government data on Friday.

The IIP growth in November 2018 was 0.2 per cent.

According to the National Statistical Office (NSO) data, the growth in the manufacturing sector was 2.7 per cent as against a contraction of 0.7 per cent in the same month last year.

Electricity generation turned negative (-) 5 per cent as against a growth of 5.1 per cent in November 2018.

Mining sector output decelerated to 1.7 per cent from 2.7 per cent in the year ago month.

The IIP growth during April-November period of the current fiscal came in at 0.6 per cent, down from 5 per cent in the same period of 2018-19.

The data for the November month further revealed that production of capital goods, a barometer of investment, contracted by 8.6 per cent. This compares with a contraction of 4.1 per cent in November 2018.

Also, there was a contraction of 3.5 per cent in the infrastructure and construction goods segment.

While consumer durable output was in the negative territory, the consumer non-durable segment or FMCG goods recorded a small growth of 2 per cent (against contraction of 0.3 per cent in November 2018).

As per the NSO data, 13 out of the 23 industry groups in the manufacturing sector showed positive growth during November 2019 as compared to the corresponding month of the previous year.

Commenting on the data, Rumki Majumdar, Economist, Deloitte India said the latest IIP numbers came as a relief to the market and policy makers as the activity in the industry sector showed some traction.

On a month-on-month basis, growth has been broad-based with capital and durable goods showing considerable improvement, Majumdar said, and added that relative to the previous year, growth in manufacturing has been impressive, although it could not build on the past month's growth momentum.

Karan Mehrishi, Lead Economist at Acuit Ratings & Research, said, "Minor recovery in the IIP is a function of a favourable base effect, which will continue to benefit until the end of the financial year. On these lines, manufacturing, which was contracting continuously for the previous three months has received a fillip from the contraction in November 2018 (base year). Segments without such benefit are maintaining their negative outlook, baring consumer non-durables (use based).

The industry group 'manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials' has shown the highest positive growth of 23.2 per cent followed by 12.9 per cent in manufacture of basic metals'.

On the other hand, the industry group 'other manufacturing' has shown the highest negative growth of (-) 13.5 per cent followed by (-) 12.6 per cent in manufacture of motor vehicles, trailers and semi-trailers'.