India's industrial output falls to 2.4% in November 2023
India's industrial growth took a hit in November 2023, dropping to 2.4% from October's impressive 16-month high of 11.6%. According to the Union Ministry of Statistics and Programme Implementation, this decline is the lowest in eight months. The figure also fell short of economists' predictions of 3.5% and is attributed to fewer working days due to the Diwali festival, which affected production levels.
Manufacturing sector drags down growth
The manufacturing sector, which makes up over 75% of the Index of Industrial Production (IIP), experienced a significant slowdown. Production increased by only 1.2% year-on-year in November, compared to a 10.2% rise in October. Other sectors, such as electricity generation and mining, also saw a dip in growth, with increases of 5.8% and 6.8%, respectively, compared to 20.4% and 13.1% in October.
A look at production growth across different categories
When examining the use-based classification of goods, all six categories experienced lower production growth in November compared to October. The figures were as follows: Primary goods (8.4% vs 11.4%), Capital goods (-1.1% vs 21.3%), Intermediate goods (3.5% vs 9.4%), and Infrastructure goods (1.5% vs 11.3%). Consumer durable and non-durable goods stood at (-5.4% vs 15.9%) and (-3.6% vs 8.7%), respectively.
IIP calculation method needs to be changed
Economists caution that IIP data may be influenced by seasonal factors, as Diwali fell in different months in 2022 and 2023. They suggest that average growth for October-November might provide a more accurate representation of the situation. If the average is taken into account, industrial output in October-November 2023 is up 7% YoY compared to October-November 2022.
