Big economic shock for PM fall in industrial output

New Delhi, Nov 10: A decline in the manufacturing of consumer durables brought down India's factory output growth in September to 3.80 per cent from 4.46 per cent in August.

According to the Index of Industrial Production (IIP) released by the Central Statistics Office (CSO) on Friday: "The general index for the month of September 2017 stands at 122.7, which is 3.8 per cent higher as compared to the level in the month of September 2016."

"The cumulative growth for the period April-September 2017 over the corresponding period of the previous year stands at 2.5 percent."

As per the IIP data, the slowdown on a sequential basis was mainly on account of deceleration in consumer durables, mining and electricity outputs.

On a year-on-year basis, the manufacturing sector expanded by 3.4 per cent, whereas mining output was 7.9 per cent and the sub-index of electricity generation expanded -- albeit rather slowly -- by 3.4 per cent.

Among the six use-based classification groups, the output of primary goods grew by 6.6 per cent, capital goods by 7.4 per cent and intermediate goods by 1.9 per cent.

The infrastructure/construction goods output was flat at 0.5 per cent.

In contrast, the output of consumer durables declined by (-)4.8 per cent, whereas consumer non-durables grew by 10 per cent.

"In terms of industries, 11 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of September 2017 as compared to the corresponding month of the previous year," the "Quick Estimates of IIP" statement said.

"The industry group ‘manufacture of pharmaceuticals, medicinal chemical and botanical products' has shown the highest positive growth of 26.4 per cent followed by 13.2 per cent in ‘manufacture of computer, electronic and optical products' and 13.1 per cent in ‘manufacture of motor vehicles, trailers and semi-trailers'."

On the other hand, industry group "other manufacturing" showed highest negative growth of (-)27.1 per cent followed by (-)23.1 per cent in "manufacture of tobacco products" and (-)19.2 per cent in "manufacture of electrical equipment".

"The IIP was up 3.8 per cent on-year in September, after growing 4.5 per cent in August, riding on festive demand," rating agency CRISIL said.

"Government's recent measures to address concerns related to Goods and Services Tax (GST), especially in the MSME segment, augur well for IIP growth."

Commenting on the IIP number, Rishi Shah, Economist, Deloitte said: "Importantly, despite the setting in of the festival season, consumer durables saw a contraction and continued its weak performance possibly signalling subdued levels of overall demand."

"Overall, industrial production is expected to remain in single-digit territory in the near future."