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India's industrial output grows at fastest pace in 6 months

National Statistical Office (NSO) data shows India's industrial output grew at 2 percent in January which is fastest in past 6 months, it happened mainly due to growth in mining sector output
New Delhi: Finally there are some signs of recovery in India's industrial output showing up in NSO data. The National Statistical Office (NSO) data shows India's industrial output grew at a pace of 2 percent in the first month of the last quarter of this fiscal. This 2 percent is the fastest in past 6 months, the data shows. Credit goes to the mining sector where the output posted a growth of 4.4 per cent in January 2020. India's factory output that is measured in terms of the Index of Industrial Production (IIP), had recorded a growth of 1.6 percent in January 2019. It grew at 4.9 percent in July 2019.

The figures

The production that had contracted by 1.4 percent in August, 4.6 in September and 6.6 percent in October last year, grew 1.8 percent in November and 0.1 percent in December 2019. However, in the last month, provisional data had shown that IIP contracted by 0.3 per cent in December 2019.

The drivers

The NSO data suggests that the manufacturing sector output grew at a rate of 1.5 per cent in January as compared with a rise of 1.3 per cent in the corresponding month a year ago. Electricity generation moved up to 3.1 percent, against 0.9 percent growth in January 2019. The mining sector emerged strongly which posted a growth of 4.4 percent in January 2020, compared with a rise of 3.8 percent a year ago. The Index of Industrial Production growth during the April 2019-January 2020 period decelerated to 0.5 percent, from 4.4 per cent expansion in the corresponding period of 2018-19.

Production of capital goods shrunk further

The data for January further showed that production of capital goods, a barometer of investment, shrunk further by 4.3 percent as compared with a contraction of 3.6 percent in the corresponding month of the previous year. As per use-based classification, the growth rates in January 2020 over January 2019 are 1.8 percent in primary goods, 15.8 percent in intermediate goods and (-) 2.2 per cent in infrastructure and construction goods.