India’s industrial production contracts 0.1% in August

India’s industrial production, measured in terms of the Index of Industrial Production (IIP), turned negative as it contracted by 0.1 per cent in August 2024, after a gap of nearly two years, mainly due to a decline in the mining and power generation sectors’ output, in addition to an almost flat expansion in the manufacturing sector. According to the data released by the National Statistical Office (NSO), factory output growth has also been revised downwards for July to 4.7 per cent from the earlier estimate of 4.8 per cent. The IIP growth in August 2023 was 10.9 per cent. The Quick Estimates of IIP stood at 145.6 against 145.8 in August 2023. The last contraction in IIP was witnessed in October 2022, when the output index declined by 4.1 per cent. During April-August 2024-25, the IIP growth was 4.2 per cent lower against 6.2 per cent a year ago.

The data showed that the growth rates in mining, manufacturing and electricity during August 2024 were (-) 4.3 per cent, 01 per cent and (-) 3.7 per cent, respectively. It is likely that the decline in the growth of the mining sector is due to heavy rainfall in the month of August 2024. Within the manufacturing sector, top three positive contributors for the month of August 2024 are – ‘Manufacture of basic metals’ (3.0%), ‘Manufacture of electrical equipment’ (17.7%), and ‘Manufacture of chemicals and chemical products’ (2.7%). The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of August 2024 stood at 107.1, 145.9 and 212.3 respectively.

As per the use-based classification released by the NSO, the output of primary goods contracted by 2.6 per cent in August against a growth of 12.4 per cent a year earlier. The capital goods segment growth decelerated to 0.7 per cent in August 2024 from 13.1 per cent in the year-ago period. The expansion in the intermediate goods segment was 3 per cent down as compared to 7.4 per cent in the year-ago period. According to the data, infrastructure/construction goods reported a growth of 1.9 per cent in August 2024, down from a 15.7 per cent expansion in the year-ago period. Consumer durable goods production growth too slowed to 5.2 per cent during the reporting month compared to an expansion of 6 per cent in August 2023. Consumer non-durables output contracted by 4.5 per cent against a growth of 9.9 per cent in August 2023.