After 3 months, factory output grows in November 2019

Our Bureau New Delhi | Updated on January 10, 2020 Published on January 10, 2020

File photo   -  Reuters

Mining sector output decelerated to 1.7 per cent from 2.7 per cent in the year ago month

India’s factory output expanded in November after three months of contraction.

According to the data released by the National Statistic Office, the Index of Industrial Production (IIP) expanded 1.8 per cent in November over the same month in 2018.

This recovery is expected to take some pressure off the government and the Reserve Bank of India to provide a booster dose in the upcoming Budget and the monetary policy review, respectively.

The November turnaround was led by manufacturing, which grew2.7 per cent. An improved performance in manufacturing implies better prospect for job creation as it is believed that the can generate four indirect jobs for every direct job it creates. A good show in manufacturing also translates to improved Goods & Services Tax (GST) collections.

Within manufacturing, 13 of the 23 industry groups have shown positive growth in November over the same month in 2018.

‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ posted the highest growth of 23.2 per cent followed by ‘Manufacture of basic metals’ (12.9 per cent).

On the other hand, ‘Other manufacturing’ contracted the most at(-)13.5 per cent followed by ‘Manufacture of motor vehicles, trailers and semi-trailers’ (-12.6 per cent).

By use-based classification, Primary Goods contracted by (-) 0.3 per cent in November, Capital Goods (-) 8.6 per cent, , Infrastructure/Construction Goods (-) 3.5 per cent, and Consumer Durables (-) 1.5 per cent. Consumer Non-Durables grew by 2.0 per cent and Intermediate Goods 17.1 per cent.

No greenshoots yet

Sunil Kumar Sinha, Principal Economist with India Ratings, said though the turnaround in factory output growth is a welcome sign, it still cannot be seen as greenshoots on the industrial front as a number of key use-based sectors like consumer durables, capital and infrastructure goods are still in the negative zone.

“Unless and until majority of the use-based sectors show positive growth on a sustained basis, it would be difficult to believe that the industrial sector has come out of the woods,” he said.

Published on January 10, 2020
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