India’s IIP rises 5.2% in January 2023

The growth of primary goods stood at 9.6 percent compared to 8.3 percent while capital goods grew at 11 percent compared to 7.6 percent in the previous month. The infrastructure sector grew at 8.1 percent compared to 8.2 percent in the previous month.

On the other hand the consumer durables sector saw a decline of 7.5 percent in January 2023 compared to a decline of 10.4 percent reported in December 2022. The consumer non-durables grew at 6.2 percent compared to 7.2 percent in the previous month.

The IIP data is an index that provides insights into the overall performance of the industrial sector in India. It is used to access the current economic conditions and formulate economic policies.

Aditi Nayar, Chief Economist and Head of Research & Outreach at ICRA Ltd, commented on the January 2023 Index of Industrial Production (IIP) data stating that the growth of 5.2 percent was in line with their expectations of 5.6 percent

The growth was driven by a robust performance of primary, capital, and infra goods as well as consumer non-durables. These gains managed to offset the slight increase in intermediate goods and prevent a downturn in consumer durables, she said.

"A portion of the continuing, albeit narrower contraction in consumer durables stems from weak exports. Encouragingly, the IIP growth of 5.2 percent for January 2023 recorded an uptick both in sequential terms (+4.7 percent in Dec 2022), as well as compared to the tepid average of 2.6 percent for Q3 FY2023, and stood at the second highest level since July 2022," she informed.

"Despite the subdued base related to the third wave of Covid-19, some of the available high frequency indicators recorded a weaker YoY performance in February 2023, relative to January 2023, such as Coal India Limited’s output, rail freight traffic, ports cargo traffic, electricity generation and auto output. In contrast, vehicle registrations and finished steel consumption witnessed an improved YoY performance in February 2023, relative to the previous month. Based on these trends, we expect the IIP to record a dip in the YoY growth to 3-5 percent in February 2023," Nayar added.