India’s IIP rises marginally to 4.8% in July

India's industrial production continued to grow steadily in July 2024, with the Index of Industrial Production (IIP) rising by 4.8%. This marked a slight improvement from the 4.7% growth in June 2024, according to the data released by the Ministry of Statistics and Programme Implementation on Thursday. The IIP is a measure of various sectors of the economy, including manufacturing, electricity, and mineral mining. 

Key sectors contributing to this growth included manufacturing and electricity, with the electricity sector seeing a 7.9% increase, and manufacturing registering a 4.6% rise. The mining sector also played a role, growing by 3.7% during the same period. The ministry stated that the Quick Estimates showed the IIP at 149.6, compared to 142.7 in July 2023. 

Within manufacturing, several industries posted notable performances. Basic metals production rose by 6.4%, while the manufacturing of coke and refined petroleum products increased by 6.9%. However, the most significant growth came from the manufacture of electrical equipment, which surged by 28.3%, making it the top contributor to the sector’s overall expansion, the ministry states.

Based on the type of goods produced, the IIP data showed that primary goods reached an index of 150.1, while capital goods, essential for long-term investments, grew by 12% to an index of 114.4. Intermediate goods rose by 6.8%, and infrastructure/construction goods climbed to 4.9% with an index of 178.7, reflecting the continued momentum in India's infrastructure development. Consumer durables posted an 8.2% increase, but the consumer non-durables sector saw a 4.4% decline.

The growth rates in various categories compared to July 2023 reflected positive trends, especially in primary goods (5.9%), capital goods (12%), and consumer durables (8.2%). However, the dip in consumer non-durables highlighted areas that require attention to meet demand for everyday products.

Additionally, the data for June 2024 has been revised for the first time. The response rates for July’s Quick Estimates, June’s first revision, and April’s final revision were 91%, 94%, and 96%, respectively, ensuring a high degree of accuracy in reporting.

The IIP data for August 2024 is scheduled to be released on October 11, 2024.

“The YoY growth in the IIP inched up slightly to 4.8% in July 2024 from the revised print of 4.7% in June 2024, led by the manufacturing sector, even as growth in mining output and electricity generation decelerated between these months. Interestingly, four of the six use-based segments, excluding capital and intermediate goods, witnessed a deterioration in their performance in July 2024 vis-à-vis June 2024, signalling that economic activity remains fairly uneven," says, Aditi Nayar, chief economist and head of Research and Outreach at ICRA Ltd.

"ICRA anticipates the YoY growth in the IIP to ease to sub-3.0% in August 2024, amid the contraction in electricity and mining output owing to excess rains, as well as an adverse base (+10.9% in Aug 2023 vs. 6.2% in Jul 2023)," Nayar adds.