India’s Index of Industrial Production (IIP) saw a marginal contraction of 0.1 per cent in the month of August, against July’s 4.7 per cent as manufacturing production rose by 1 per cent, the Ministry of Statistics data showed on Friday.
In the manufacturing sector, the top three positive contributors were the manufacturing of basic metals (3.0 per cent), electrical equipment (17.7 per cent), and chemicals and chemical products (2.7 per cent) in August.
The growth rate of mining was down 4.3 per cent. It is likely that the decline in the growth of the mining sector is due to heavy rainfall in the month of August 2024, said the ministry.
The Quick Estimates of IIP stood at 145.6 against 145.8 in August last year, according to the data.
The indices of industrial production for the mining, manufacturing and electricity sectors for August stood at 107.1, 145.9 and 212.3, respectively. The indices stood at 141.6 for primary goods, 108.1 for capital goods, 162.2 for intermediate goods, and 180.2 for infrastructure/construction goods for August. Further, the indices for consumer durables and consumer non-durables stood at 129.6 and 141.6, respectively.
According to credit rating agency ICRA, while unpalatable, the marginal contraction of 0.1 per cent displayed by the IIP in August is not alarming, as it largely reflects the temporary dousing of mining output, electricity demand, and retail footfalls by the heavier-than-normal rains, as well as an unfavourable base.
While the pace of expansion in finished steel consumption dipped in September 2024 compared to August, it remained in double digits for the eighth consecutive month.
ICRA’s Chief Economist and Head, Research and Outreach, Aditi Nayar said that they anticipate the YoY growth in the IIP to improve to 3-5 per cent in September, amid a likely narrower contraction in electricity and mining output, as well as a favourable base, and a sharp uptick in the growth in GST e-way bills (to 18.5 per cent in September from 12.9 per cent in August), “supported by pre-festive stocking”.