Industrial production grows by 1.3% in January

India’s industrial production grew by 1.3% in January 2022, recovering marginally from a revised growth rate of 0.7% for December 2021 but still only 0.7% above pre-pandemic levels, according to data from the National Bureau of Statistics (NSO) emerges.

Production output increased by 1.1%, mining production by 2.8% and power generation by 0.9% year-on-year. Output growth in manufacturing and mining is largely driven by base effects as the two sectors’ output contracted by 0.9% and 2.4% respectively in January 2021 when the composite industrial production index (IIP) fell by 0. had shrunk 6%.

Manufacturing of consumer durables fell for the fifth straight month in January, contracting 3.3% compared with a 0.1% drop a year earlier. Even after accounting for fast-moving consumer goods, private consumption was subdued.

While non-durable consumer goods production grew 2.1% yoy in January, the fastest pace since August 2021, it marked a significant 5% decline from December 2021 levels. Output growth in the segment was flat in both September and December December 2021 slightly down from 2020 levels.

Capital goods manufacturing also contracted for the fourth straight month, falling 1.4% in January, compared with a sharper 3.76% decline in December. The production of capital goods fell sharply by 9% in January 2021.

Primary goods production growth slowed to 1.6% in January from 2.7% in December 2021, but infrastructure and construction goods rose to their fastest pace in three months at 5.4%, compared with just 2.05 % in December. The NSO also revised its estimates for industrial production growth in October 2021 to 4.16% from a previously estimated 4.01%.

“Compared to the pre-Covid level in January 2020, the IIP showed a slight increase of 0.7%, with lower production of durable and non-durable consumer goods and capital goods being a drag,” said ICRA chief economist Aditi Nayar.

However, the pick-up in infrastructure/construction goods growth is promising following the contraction in construction gross value added (GVA) in the third quarter of 2021-22,” she added.

ICRA expects IIP growth to remain below 2% in February as production and power generation are unlikely to pick up and state-owned Coal India Limited’s mining output was lower than 2021.

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