Factory output shoots up in October; manufacturing grows for first time since February 2020

The industrial production of India grew at 3.6 per cent in October, which is the highest level since February 2020. A significant rise in the factory output is witnessed after it consecutively fell for the six months till August, and rose marginally by 0.5 per cent in September 2020. The eight-month high IIP is mostly driven by the improvement in the manufacturing and electricity sectors. While manufacturing rose 3.5 per cent, the first rise in eight months, electricity output surged 11.2 per cent in the month. However, the mining sector shrank 1.5 per cent, according to the Ministry of Statistics & Programme Implementation.

“The easing of lockdown restrictions and an increase in demand on the back of festive season have given rise to the industrial output, said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services. RBI policymakers are already indicating that things can only get better from here, Rahul Gupta added. So, going ahead, the pickup in demand and an eventual positive IIP figure will put India’s GDP in a better position, he further said. 

The manufacturing sector took a major hit in the first quarter. The lockdown that put the manufacturing units at standstill pushed the manufacturing GVA to a record contraction of 39.3 per cent. However, as the lockdown restrictions were lifted, it returned to growth, though marginal at 0.6 per cent in Q2. 

Except for the primary goods, all the categories under use-based classification witnessed a growth. While production of primary goods shrank by 3.3 per cent, the same of capital goods rose 3.3 per cent; intermediate goods 0.8 per cent; infra and construction goods 7.8 per cent; consumer durables 17.6 per cent; and consumer non-durables grew at 7.5 per cent. Meanwhile, the government has taken various measures, including the PLI scheme, to boost production in the manufacturing sector, and to bring investments from abroad.