April’s Factory Output Uptick At 4.2%, Pick-up In Manufacturing

Data from the National Statistical Office (NSO) released on Monday revealed that factory output increased at a faster-than-anticipated rate of 4.2 per cent in April, mostly due to a low base effect and a rebound in the manufacturing and mining sectors. 

This is in comparison with IIP at 1.1 per cent in March and 6.7 per cent in April 2022. In March, India's industrial production growth fell to a five-month low of 1.1 per cent. The NSO recently issued IIP data showing that the manufacturing sector's production increased by 4.9 per cent in April.

Manufacturing, which accounts for 77.6 per cent per cent of IIP, climbed by 4.9 per cent in April compared to 5.6 per cent in the same month last year and 1.2 per cent in March. 

“While retail inflation owes its decline to softening of food articles including vegetables and cooking oil, manufacturing, considered to be a major value adding segment of the economy, is looking up for even better prospects. As a major segment of the IIP, manufacturing showed a healthy growth of 4.9 per cent for the latest April data, this augurs well for new investment and job creation," said, Deepak Sood ASSOCHAM Secretary General.

For the month of April 2023, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stands at 140.2. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of April 2023 stand at 122.5, 138.1 and 192.3 respectively.

On this, Aditi Nayar, Chief, Economist, ICRA commented, “The IIP for April 2023 also surprised on the upside, printing at 4.2 per cent in the month in spite of the unseasonal rainfall. The YoY performance of most available high frequency indicators improved in May 2023 relative to April 2023, which should support a 4-6 per cent expansion in May 2023.”

Further, the indices for Consumer durables and Consumer non-durables stand at 106.8 and 153.7 respectively for the month of April 2023. Consumer non-durables increased in April despite consumer durables output, which represents consumer demand, continuing to decline for the fifth consecutive month at (-)3.5 per cent compared to 7.2 per cent growth in the same month last year. 

Consumer non-durables, a leading indication of fast-moving consumer goods, increased by 10.7 per cent in April compared to a contraction of (-)0.8 per cent in the same month last year.

The effect of the unusually heavy rains could also be seen in the electrical output, which fell by 1.1 per cent in April over the same period a year earlier, while mining activities increased 5.1 per cent, the data showed.

In the month of March, electricity generation provisionally fell 1.6 per cent, while mining activities provisionally increased 6.8 per cent.

“The onset of the monsoon has been delayed, and the pan-India rainfall has been deficient so far in June 2023. While seasonally healthy reservoir levels are likely to provide some respite, a normal distribution of rainfall in July 2023 will be critical to ensure timely sowing of kharif crops over the majority of the country. Nevertheless, the development of El Nino conditions would be closely monitored as these could lead to a sub-par monsoon and impact kharif yields and rabi sowing, and thereby impact crop output and food inflation,” conveyed Nayar.

Infrastructure or construction goods grew 12.8 per cent year-on-year in April, while consumer non-durables showed a growth of 10.7 per cent as compared to last year. Capital goods grew 6.2 per cent year-on-year during the month.

These Quick Estimates will undergo revision in subsequent releases as per the revision policy of IIP. 3. As per Use-based classification, the indices stand at 142.1 for Primary Goods, 94.0 for Capital Goods, 150.7 for Intermediate Goods and 168.8 for Infrastructure/ Construction Goods for the month of April 2023.

Along with the Quick Estimates of IIP for the month of April 2023, the indices for March 2023 have undergone the first revision and those for January 2023 have undergone final revision in the light of the updated data received from the source agencies. The Quick Estimates for April 2023, the first revision for March 2023 and the final revision for January 2023 have been compiled at weighted response rates of 90 percent, 94 percent and 95 percent respectively.