NEW DELHI: The Index of Industrial Production (IIP) in August registered a year-on-year decline of 0.1%, a significant drop from the 4.7% growth recorded in July. This decrease is on account of reductions in the output of mining and electricity, alongside a notable slowdown in manufacturing for the month, the National Statistical Office (NSO) data showed.
As per the data, mining output fell by 4.3% in August, a sharp fall from the 3.8% growth recorded in the previous month. Electricity output fell by 3.7%, down from 7.9%. Manufacturing output slowed to 1% in August, compared to 4.4% in July.
Data indicated that 11 out of the 23 manufacturing sectors saw a fall in output growth during August, with sectors including food products, beverages, paper, coke, and refined products among those affected. Output in various use-based categories saw a slowdown, with capital goods growing by 0.7%, intermediate goods by 3%, infrastructure goods by 1.9%, and consumer durables by 5.2%. Conversely, output in primary goods contracted by 2.6%, while consumer non-durables saw a decline of 4.5% during the month.
Meanwhile, from April to August 2024, the IIP saw a growth of 4.2%, in contrast to 6.2% growth observed during the same period in the previous fiscal year. As per Rajani Sinha, chief economist, CareEdge Ratings, “The slowdown was due to unfavourable base. Among major sectors, mining and electricity sectors saw a contraction. Heavy rainfall in August may have had a bearing on the mining sector slowdown. Consumption-related segments showed a mixed performance, with the output of consumer durables rising by 5.2%, while non-durables remained in contraction for the third consecutive month, declining by 4.5%.”
“Although the monsoon has been favourable, its distributional issues remained. Domestic private consumption demand is expected to pick up during the early festive season this year. External demand remained weak, evidenced by two consecutive months of contraction in merchandise exports during July and August,” Sinha added.