India's industrial growth, as per the Index of Industrial Production (IIP), slumped to 0.4 percent in December 2021 from 1.3 percent the previous month, data released on February 11 by the National Statistical Office showed.
At 0.4 percent, IIP growth in the last month of 2021 is the slowest in 10 months.
The slowdown in industrial growth is not unexpected. Data released last month showed India's eight core sectors expanded by just 3.8 percent year-on-year in December 2021 as against 3.4 percent in November 2021. With the eight core industries together accounting for 40.3 percent of the total weight of the IIP, industrial growth was seen falling in December 2021.
The manufacturing sector, which makes up over three-fourths of the IIP, contracted by 0.1 percent year-on-year in December 2021. This is the first such contraction of the sector since February 2021.
In November 2021, manufacturing output had increased by a mere 0.8 percent.
As per the use-based classification, three of the six goods - capital, consumer durables, and consumer non-durables - saw their output shrink in December 2021. The production of the remaining three - namely primary, intermediary, and infrastructure goods - witnessed minor increases.
| DECEMBER 2021 | NOVEMBER 2021 | DECEMBER 2020 | |
| IIP growth | 0.4% | 1.3% | 2.2% |
| Mining | 2.6% | 4.9% | -3.0% |
| Manufacturing | -0.1% | 0.8% | 2.7% |
| Electricity | 2.8% | 2.1% | 5.1% |
| USE-BASED CLASSIFICATION | |||
| Primary goods | 2.8% | 3.5% | 0.4% |
| Capital goods | -4.6% | -2.0% | 2.2% |
| Intermediate goods | 0.3% | 2.4% | 2.3% |
| Infrastructure/construction goods | 1.7% | 3.1% | 3.1% |
| Consumer durables | -2.7% | -5.4% | 6.5% |
| Consumer non-durables | -0.6% | 0.5% | 1.9% |
"The contraction in capital goods, consumer durables, and consumer non-durables, along with a feeble growth in the remaining categories ranging from 0.3 percent to 2.8 percent in December 2021, add heft to the Monetary Policy Committee's (MPC) decision to remain growth supportive in light of the incomplete recovery," Aditi Nayar, ICRA's chief economist, said.
On February 10, Reserve Bank of India Governor Shaktikanta said the MPC had voted to leave the repo rate unchanged at 4.00 percent and had retained its accommodative stance. The committee noted in its statement that recovery in domestic economic activity is yet to be broad-based.
For April-December 2021, industrial output has clocked a growth of 15.2 percent as against a contraction of 13.3 percent in April-December 2020.
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