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November IIP disappoints for second consecutive months; shrinks by 2.1%

13 Jan 2014 Evaluate

Against all hopes of slight recovery after shrinking for the first time in four months for the month of October, India’s annual industrial output growth, measured by index of industrial production (IIP), in a much of a shocker, contracted further by 2.1% in November as compared to the same month last year. IIP, which shrank by 1.8% in October, was way lower than street’s expectation of modest growth figure of 1% in November and further added to the concerns as policy makers’ grapple with slowing growth, while battling with rampant inflation. Meanwhile, the cumulative growth for the period April-November 2013-14 over the corresponding period of the previous year stood at -0.2%.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of November 2013 stood at 122.9, 170.3 and 158.5 respectively, with the corresponding growth rates of 1.0%, -3.5% and 6.3% as compared to November 2012. The cumulative growth in the three sectors during April-November 2013-14 over the corresponding period of 2012-13 has been -2.2%, -0.6% and 5.4% respectively.

On use based classification, capital goods production, a barometer for investments in the economy, grew by of 0.3% at 236.1 for November as compared to 235.4 in the same month previous year. Further, Consumer durables and Consumer non-durables recorded growth of (-) 21.5% and 2.5% respectively, with the overall growth in Consumer goods being (-) 8.7%.

The latest data paints grim outlook for the economy ahead of the crucial wholesale and consumer price data, which will help determine whether the Reserve Bank of India will resume raising interest rates after tightening monetary policy by a total of 50 basis points over September and October.

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