IIP up 5.8% driven by growth in mining, manufacturing 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 picked up to 3.9% in 2023-24 from 0.6% in 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. 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.