India Industrial production growth scaled  up slightly to 5.2% in Jan from 4.7% in Dec 2022, mainly due to good performance of the power, mining and manufacturing sectors, according to official data released on Friday.

 There was an improvement on an annual as well as sequential basis. The factory output growth measured in terms of the Index of Industrial Production (IIP) stood at two % in January 2022. As per the Industrial production  data released by the National Statistical Office (NSO), the manufacturing sector's output grew 3.7 % in January 2023 from 1.9 % a year ago. Mining output rose 8.8 % during the month under review compared to 3 % in January 2022. Power generation also surged 12.7 % in January 2023 against 0.9 % in the year-ago month.

As per use-based classification, the capital goods segment recorded a growth of 11 % in January against a growth of 1.8 % in the corresponding month of the last fiscal. "Surprisingly, manufacturing output increased by 3.7% year-on-year...driven partly by the low base, but possibly also by anticipated improved demand in light of China's reopening news," said Rahul Bajoria, managing director and head of emerging market Asia (exChina) economics, Barclays. "The data suggests that manufacturing is still stronger in India than elsewhere in Asia, as also shown in PMI data." Consumer durables output declined by 7.5 % compared to a contraction of 4.4 % a year ago.

Consumer non-durable goods output expanded by 6.2 % against a growth of 3.1 % earlier. Infrastructure/construction goods too posted a growth of 8.1 % compared to a 5.9 % expansion in the same month of 2022. The data also showed that the output of primary goods logged 9.6 % growth in the month against 1.6 % in the year-ago period. The intermediate goods output growth decelerated to 0.1 % from 2.5 % earlier.

For the first 10 months of the current fiscal (AprilJanuary), the growth in IIP works out to be 5.4 %, down from 13.7 % in the year-ago period. "The moderate IIP growth of 5.2% for January 2023 printed in line with our expectations (5.6%), with a healthy performance of primary, capital and infra goods and consumer non-durables offsetting the marginal rise in intermediate goods and discouraging contraction in consumer durables," said Aditi Nayar, chief economist, ICRA.

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