Industrial output, as measured by the Index of Industrial Production (IIP), grew 0.4% in December from a year earlier, slipping further from the tepid 1.3% expansion in November. Industrial growth was 2.2% in December 2020.
As per data released by the National Statistical Office, month-on-month, industrial output rose 7.4% in December.
‘Puts Question Mark on Recovery’
“Lacklustre IIP growth puts a question mark on the current recovery,” India Ratings economist Sunil Kumar Sinha said, calling for more measures to support industrial recovery.
The Reserve Bank of India had on Thursday kept key policy rates unchanged, contrary to expectations of a hike in the reverse repo rate to control the supply of money, flagging the need to revive and sustain growth on a durable basis.
Terming the IIP performance “disappointing”, Bank of Baroda chief economist Madan Sabnavis said: “The pent-up demand story witnessed in the earlier months has eased with the mini lockdown contributing at the margin.”
The third wave of the pandemic impacted the services sector more than manufacturing.
Manufacturing contracted 0.1% in December, while mining output rose 2.6% and electricity generation expanded 2.8%. Ten out of 23 manufacturing sub-sectors recorded a fall in output in December.
In terms of use-based categories, consumer durables production contracted 2.7% while consumer non-durables output shrank a lower 0.6%. Production of capital goods, an indicator of investment activity, contracted 4.6% in December. The output of intermediate goods remained almost unchanged compared with their levels a year earlier.
