NEW DELHI: Although slowed down a bit the growth of industrial production in the country in March is still quite strong in manufacturing and electricity sector that offsets decline in the mining, while overall economic growth for this fiscal year remained stable, as data showed on Friday.
Industrial Production Index (IIP) by National Bureau of Statistics (NBS) rose by 4.9% YoY for March which was slightly less than -5.6% MoM but better than +1.9% YoY closed last month ending in February.
In comparison to March 2012, when it was 1.5%, manufacture sectors experienced an increased output of about 5.2%, whilst power industry grew by 8.6% as opposed to shrinking by -1.6% in same period last year; however, no so good news can be reported about mining where production fell to just 1.2% from previous years’ level of 6.8%. This manufacturing expansion is consistent with other data such as Manufacturing PMI which had predicted on-going industry expansions due to strong domestic demand.
On durable consumer goods front, the monthly expansion rate was +9.5%; compared to last year’s contraction of (-8%) whereas non-durable consumer goods increased marginally over a similar timeframe at (+4.9%) against a drop of (-1.9%).
Capital Goods’ industry- considered as Kuznets Cycle indicator- registered lower growth rates during the reviewed months – up only by +6.1%; that’s compared to the month ending same day last year when it stood at +10%; and infrastructure/building products sectors also recorded slight decrease from their previous-year records i.e., current value indicates less than (7=7) percent.
“Consumer durables expanded by 9.5%, reversing two months contraction after growing at negative rates for two consecutive months and non-durables entered into positive territory of 4.9%. Nonetheless, it remains to be seen if this trend will continue in the coming months” said Rajani Sinha, Chief Economist at CareEdge Ratings. “The continued strong performance of the infrastructure /construction products segment supports our view that industrial activity is on a recovery path and we expect it to continue in future,” she added.
She stated, “FY24 consumption picture is mixed with urban demand remaining resilient while rural demand still lags.” She also commented that “But there are expectations of good monsoons, falling inflation and some pickup in rural demand which augur well for overall consumption scenario. Hence, sustainable improvement across all areas and long-term in this fiscal year’s consumption context should be considered by us”.
