Industrial production grows 1.8% in November; Gives room to Policy Makers to provide booster dose in Budget

Reversing three consecutive months of contraction, India's industrial production expanded at a modest pace in November 2019 on account of growth in the manufacturing sector. National Statistical Office's (NSO's) data released on Friday said Industrial output, as measured by the Index of industrial production (IIP), grew 1.8 per cent in November against a contraction of 3.9 per cent in October.

The Index of Industrial Production (IIP) had grown by 0.2 per cent in November 2018.

The report says the growth in the manufacturing sector was 2.7 per cent as against a contraction of 0.7 per cent in November 2018. Within manufacturing, 13 of the 23 industry groups have shown positive growth in November over the same month in 2018.

The growth is an indication of a slight pickup in the economy in the second half of the financial year 2019-20, which can give a relief to the policymakers while deciding on the budget. As this recovery will take off some pressures over the government to provide a booster dose in the Union Budget 2020-21, which will be announced on February 1, 2020. It will also give some room to the Reserve Bank of India to provide some relaxation in the next monetary policy review.

However, electricity generation turned negative (-) 5 per cent as against a growth of 5.1 per cent in November 2018. Mining sector output decelerated to 1.7 per cent from 2.7 per cent in the year-ago month. Also, there was a contraction of 3.5% in the infrastructure and construction goods segment.

The IIP growth during April-November period of the current fiscal came in at 0.6 per cent, down from 5 per cent in the same period of 2018-19.

The Index of Industrial Production (IIP) is a closely followed high-frequency indicator of the performance of the economy and a critical input into other measures of the economy, in particular, the quarterly, advance, revised and quick estimates of the National Accounts Statistics.