Subdued manufacturing growth as well as unfavourable base eased India's industrial output sequentially as well as on a year-on-year basis in December 2021, official data showed on Friday.
The Index of Industrial Production (IIP) for December 2021 rose by only 0.4 per cent from a rise of 1.34 per cent reported for November 2021.
Similarly, the production rate was lower on a year-on-year basis. In December 2020, the IIP had risen by 2.2 per cent.
"For the month of December 2021, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stands at 138," said the Ministry of Statistics and Programme Implementation.
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"The Indices of Industrial Production for the 'Mining, Manufacturing and Electricity' sectors for the month of December 2021 stand at 120.3, 138.8 and 162.5, respectively."
On a YoY basis, the mining excavation output grew by 2.6 per cent from (-) 3 per cent in December 2021. However, manufacturing production slipped by 0.1 per cent from a rise of 2.7 per cent and electricity generation rose at a slower rate of 2.8 per cent from 5.1 per cent.
Among the major use-based segments, the December data, on a YoY basis, showed that manufacturing of primary goods grew by 2.8 per cent from 0.4 per cent, whereas capital goods production fell by 4.6 per cent from a rise of 2.2 per cent, and intermediate goods increased at a slower rate of 0.3 per cent from 2.3 per cent.
Similarly, the production of infrastructure or construction goods rose at a slower rate of 1.7 per cent from 3.1 per cent.
However, consumer durables' production degrew by 2.7 per cent from a rise of 6.5 per cent and the sub-segment of consumer non-durables slipped by 0.6 per cent from 1.9 per cent.
"Belying our expectation of a mild uptick, the YoY IIP growth crumbled to a marginal 0.4 per cent in December 2021, partly on account of an unfavourable base," ICRA Chief Economist Aditi Nayar said.
"The contraction in capital goods, consumer durables and consumer non-durables, along with a feeble growth in the remaining categories ranging from 0.3 per cent to 2.8 per cent in December 2021, add heft to the MPC's decision to remain growth supportive in light of the incomplete recovery."
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India Ratings and Research's Principal Economist, Sunil Kumar Sinha, said: "Lacklustre IIP growth puts a question mark on the current recovery. It also indicates that policy makers may have to take more measures to support industrial recovery as high commodity prices have made most inputs particularly fuel and materials quite expensive."
"IIP growth in December 2021 is the lowest in four months, with manufacturing being the major drag accounting for 77.6 per cent weight in IIP."
