IIP up 5.8% driven by growth in mining, mfg in FY24
MINING SECTOR GREW 7.5% IN FY24 SIGNIFICANTLY MORE THAN THE 5.9% A YEAR AGO
NEW DELHI: Factory output, as measured by the Index of Industrial Production (IIP) grew 5.8% led by a pickup in the pace of growth in the mining and manufacturing sectors in 2023-24 according to data by the National Statistics Office on 10 May. India’s industrial production had grown 5.3% in 2022-23.
The mining sector grew 7.5% in 2023-24 significantly more than the 5.9% growth in the same period the previous year. The manufacturing sector too grew at a pace of 5.4% in FY24, 0.7 percentage points more than the growth rate in 2022-23. Although there was a growth in the headline number, the electricity sector lagged in the reporting year, growing at a pace of 7.1% significantly slower than the 8.9% previous year.
In terms of use-based classification, primary goods growth slowed to 6% from 7.5 % in the previous year. Growth in the capital goods sector too fell to 6.1% in the reporting year, from 13% a year before. The rest of the sectors, intermediate goods, consumer goods, and construction goods registered a pick up in the pace of growth. Notably, consumer goods, which had slowed for two consecutive years, picked up to 3.9% in 2023-24 from 0.6% in the previous year. Both consumer durables and non-durables grew at a faster pace than the previous year.
On a monthly basis, IIP came in at 4.9% in March 2024 compared to the same month the previous year, lower than the 5.6% in February, according to data from Centre for Monitoring Indian Economy (CMIE). Mining and Quarrying sector growth slowed to 1.2% in March from 8.1%, in the previous month. The manufacturing and Electricity sectors grew at 5.2% and 8.6% respectively. They had grown at 4.9% and 7.5% the year before, CMIE data showed. Barring capital goods and consumer goods, all other sectors grew at a rate faster than February 2024.
“IP growth in March exhibited a usual seasonal pickup in momentum in March. Cement and steel output and vehicle production are driving growth, reflecting demand in the construction sector and trends of premiumisation, respectively. Production in export-oriented sectors, however, is yet to have a broad-based recovery. With domestic demand expected to drive growth again in FY24-25, we maintain our forecast for annual GDP growth at 7% (compared with FY23-24 of 7.8)%”, Shreya Sodhani, Regional Economist, Barclays said in a note.