IIP up 3.1% in Sep, experts say growth higher than expectations

Expressing satisfaction at the 3.1 per cent growth in India’s industrial production in September, experts also said the December monetary policy action by the central bank on the credit flow and interest rates are key factors.

Experts also expressed concern on the poor performance of the consumer durables and non-durables segment.

On Friday, the Ministry of Statistics and Programme Implementation published the quick estimates of Index of Industrial Production (IIP) for September 2022.

As per the data, the IIP grew by 3.1 per cent as compared to 4.4 per cent logged during September 2021.

CARE Ratings’ Chief Economist, Rajani Sinha, said: “The IIP growth for September has been higher than expectations. The strong growth recorded in capital goods and infrastructure sector is encouraging and is hopefully a precursor to pick up in the capex cycle.”

However, improvement in domestic consumption demand will be critical for sustained recovery in India’s growth momentum, she said.

“Hence, poor performance of IIP consumer durables and non-durables is worrisome. Going forward, as inflation moderates, we are likely to see a pickup in consumption demand,” Sihna added.

Knight Frank India’s Director, Research, Vivek Rathi, said: “A revival of 3.1 per cent in Industrial production growth is a strong indication of improving output and demand condition in the economy. The boost to industrial production in September is coming from a significant growth in capital and infrastructure output.”

However, he said that the revival in manufacturing output is moderate and is yet to a show significant recovery.

“Going forward, strong manufacturing sector performance as witnessed in expansionary manufacturing PMI (purchasing managers index) and improving capacity utilisation provides more impetus to the manufacturing output which would boost industrial production,” Rathi added.

According to him, the cues from post-Diwali season sales, sustenance of manufactured products and RBI action in December on credit flow and interest rates will hold the key for industrial production.

“The September IIP growth at 3.1 per cent is better than most estimates. The biggest component manufacturing and mining growth at 1.8 per cent and 4.6 per cent respectively is a positive. It indicates the traction in the industrial segment,” Nish Bhatt, Founder & CEO, of Millwood Kane International said.

Bhatt said the one concern is the contraction in consumer durables and non-consumer durables, despite September being a festive season month when people spend.

“The industrial growth, and CPI inflation data due next week couple d with the Q2 GDP data will be a data set that will be keenly watched by the RBI which meets next month to decide on the monetary policy,” Bhatt added.

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