New Delhi, Nov 11 (KNN) The Index of Industrial Production (IIP) experienced a significant drop to 5.8 per cent in September, marking a three-month low compared to August's 10.8 per cent,as per data released by the National Statistical Office on Friday.

The year-on-year growth rate of the manufacturing sector plunged from 9.3 per cent in August to 4.5 per cent in September, and that of electricity declined from 15.3 per cent to 9.9 per cent. Mining sector’s growth, too, eased from 12.3 per cent in August to 11.5 per cent in September.

On a month-on-month basis, factory output declined 2.4 per cent in September, the second sharpest sequential decline in the current series which started in 2012. Typically, IIP grows sequentially in September, but a fall was on account of a month-on-month contraction in manufacturing activity. In September, manufacturing output declined 2 per cent sequentially, the sharpest pace since 2012.

The atypical downturn in manufacturing was a result of a consecutive decrease in the production of food products, petroleum products, pharmaceuticals, non-metallic mineral products, chemical products, and basic metals. 

Together, these six items constitute 60 per cent of the Index of Industrial Production (IIP).

On a year-on-year basis, production of nine of 23 items within manufacturing fell in September.

The decline in the electricity and manufacturing sector’s output could be attributed to surplus rainfall during the month. In September, rainfall in India was 13 per cent  above the benchmark.

Within the use-based category, production growth of all the seven sectors declined on a year on year basis from the levels seen in August. Still, production of consumer durables and capital goods rose sequentially.

Notably, the index of consumer durables was at a 15-month high in September, indicating firming up of demand ahead of the festive season. And the capital goods index, which was at a six month high, reflected the ongoing increase in the category’s production amid the sustained rise in capital expenditure across the country, particularly from the government side.

In the first half of the current fiscal year, IIP growth averaged 6.0 per cent lower than 7.1 per cent in the corresponding period of last year.

Looking ahead, the YoY performance of a majority of the available high frequency indicators improved in October 2023, relative to September 2023. 

(KNN Bureau)