Base effect, heavy rains ease India’s Sept industrial output growth on sequential basis

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Base effect, heavy rains ease India’s Sept industrial output growth on sequential basis
New Delhi: Base effect, along with heavy rains and semiconduct or shortages slowed India’s industrial output growth to 3.1 per cent in September, on a sequential basis.

Accordingly, the rise in Index of Industrial Production (IIP) for September eased to 3.1 per cent from 12.03 per cent in August 2021.

However, on a year-on-year basis, the September out up showed an accelerating trend from a growth of just 1 per cent reported for the corresponding period of the previous fiscal.

“For the month of September 2021, the ‘Quick Estimates of Index of Industrial Production’ (IIP) with base 2011-12 stands at 127.9,” the Ministry of Statistics and Programme Implementation said.

“The ‘Indices of Industrial Production for the Mining, Manufacturing and Electricity’ sectors for the month of September 2021 stand at 95.1,129.9 and 167.9 respectively.”

Among the major use-based segments, the September data, on a YoY basis, showed that manufacturing of primary goods grew by 4.6 per cent from (-) 1.5 per cent, while capital goods production rose 1.3 per cent from (-) 1.2 per cent, and intermediate goods increased by 4.9 per cent from (-) 0.4 per cent.

The production of infrastructure or construction goods grew by 7.4 per cent from 4 per cent.

However, consumer durables’ production degrew by 2 per cent from a growth of 5.3 per cent and the sub-segment of consumer non-durables showed a decline o f 0.5 per cent from a fall of 2.4 per cent.

“As anticipated, the IIP growth recorded a broad-based plunge to an insipid 3.1 p er cent in September 2021, reflecting the base effect, disruption caused by heavy rainfall, and the impact of semiconductor shortages on auto output, despite the pre-festive season inventory build-up suggested by the GST e-way bill data,” said Aditi Nayar, Chief Economist, ICRA.

“The pace of IIP growth in September 2021 trailed our forecast of 4 per cent .”

According to Sunil Kumar Sinha, Principal Economist, India Ratings and Research: “Index of Industrial Production (IIP) for the month of September 2021 shows a yoy growth of 3.1 per cent primarily driven by manufacturing and mining sector growth.”

“No doubt festival demand is finding reflection in the yoy growth but the co nsumption demand after the Covid 1.0 and 2.0 still has not reached to the le vel that industrial output could reach or surpass the pre-Covid period.”

“India Ratings and Research (Ind-Ra) believes revival of industrial output will remain a challenge in the near term.”


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