Factory Output Growth in India
Factory output growth in India slowed to a six-month low of 2.9% in February due to a high base effect and sectoral deceleration, according to the National Statistics Office (NSO).
Index of Industrial Production (IIP)
- Factory output measured by IIP grew by 5.2% in January and 5.6% in February 2024.
- Manufacturing output, accounting for 77.6% of IIP, decreased to 2.9% in February from 5.8% in January.
- Mining output grew by 1.6% compared to 4.4% in January and 8.1% in February 2024.
- Electricity output increased by 3.6% in February, up from 2.4% in January, but lower than 7.6% a year ago.
Capital and Infrastructure Goods
- Capital goods output, an investment indicator, slowed to 8.2% from 10.3% in January but was higher than 1.7% in February 2024.
- Infrastructure goods output grew at 6.6% in February, slightly lower than the previous month but showing sustained growth.
Consumption Trends
- Consumer durables output reduced to 3.8% in February from 7.2% the previous month.
- Consumer non-durables remained negative at (-2.1%) for the third consecutive month.
- Monitoring consumption trends remains vital due to ongoing uneven domestic demand.
Future Economic Projections
- Economic growth expected to be supported by a recent rate cut by the Reserve Bank of India and easing food prices.
- An increase in power demand was observed in March 2025, with a 6.6% rise.
- Government spending is anticipated to increase to meet capital expenditure targets.
Sectoral Performance
- Out of 23 manufacturing sectors, 14 exhibited growth in February.
- High growth sectors included computer, electronic and optical products (10.6%), electrical equipment (9.3%), and motor vehicles.
- Non-performing sectors were leather and related products ((-9.4%)), paper and paper products ((-9.1%)), and printing ((-8.6%)).
Overall Output Growth
- Cumulative industrial output growth during April-February was 4.1% against 6% in the previous year.
- The electricity sector continues to be a strong performer with 5% growth.
In conclusion, while industrial output growth has experienced recent volatility, careful monitoring, especially of investment versus consumption trends, is essential for sustained economic development.
