JANUARY INDUSTRIAL OUTPUT GROWS 2.7%

IIP had contracted 0.1% in Dec; April-Jan IIP at 0.6% versus 2.7% a year ago

Industrial output in January rose 2.7 per cent, fuelled by growth in capital goods production as well as an increase in the manufacturing segment, government data showed on Friday. Industrial output had missed growth by a sliver in December, falling 0.1 per cent against a year earlier, driven down by contraction in consumer and capital goods production that were attributed to the government’s demonetisation drive. The Index of Industrial Production, or IIP, was expected to grow in January, as it reflected the corporate sector, which was not as badly hit as the informal sector and households, Devendra Pant, chief economist at India Ratings, said.

Industrial output in January rose 2.7 per cent, fuelled by growth in capital goods production as well as an increase in the manufacturing segment, government data showed on Friday.

Industrial output had missed growth by a sliver in December, falling 0.1 per cent against a year earlier, driven down by contraction in consumer and capital goods production that were attributed to the government’s demonetisation drive. The Index of Industrial Production (IIP) was expected to grow in January as it reflected the corporate sector, which was not as badly hit as the informal sector and households, Devendra Pant, chief economist at India Ratings, said. A major push to the index was provided by capital goods, which rose 10.7 per cent. Capital goods had declined three per cent in December, after a spurt of 15 per cent in November. The sector is considered highly volatile in IIP.

“The sharp turnaround in capital goods was led by its oftvolatile component, rubber insulated cables, which recorded a sharp spike in growth to 282.8 per cent in January 2017 from an already substantial 55.5 per cent in December 2016,” Aditi Nayar, principal economist at ICRA, said. However, Nayar cautioned against pinning hopes on the sustainability of capital goods maintaining double-digit growth.

The consumer durables segment returned to the growth zone, rising 2.9 per cent. It had gone down more than 10 per cent in December. The manufacturing sector — constituting threefourths of the index — rose 2.3 per cent against a two per cent decline in December. Electricity generation was up 3.9 per cent against a 6.3 per cent rise in December. On the other hand, mining activity rose 5.3 (5.2 per cent in December).