Industrial output grows 3.6% in October, indicating strong recovery

India's index of industrial output for the month of October was at 3.6 percent, against 0.5 percent September, as per the Index of Industrial Production (IIP) data released by the government on December 11.

"While the IIP growth stood at an eight month-high, and displayed its best performance since the pandemic struck, the pace of the improvement in October 2020 was feebler than expected," Aditi Nayar, principal economist, ICRA said.

The manufacturing sector production registered a growth of 3.5 percent in October, while the output of mining and electricity segments contracted 1.5 percent and grew 11.2 percent respectively. In October 2019, IIP had contracted -6.6 percent.

In October, primary goods production contracted 3.3 percent, capital goods production grew 3.3 percent, intermediate goods grew 0.8 percent, infrastructure goods grew 7.8 percent, consumer durables grew 17.6 percent, and consumer non-durables grew 7.5 percent.

"The healthy improvement in the performance of consumer durables and non-durables in October 2020 relative to the previous month, is testament to the expectation of a buoyant festive season. However, the benefit provided by the low base, especially for consumer durables, can not be ignored," Nayar said.

Textile manufacturing contracted 7.7 percent in October, while leather and related products grew 3.4 percent. Wearing apparel contracted 11.8 percent in October.

"This is a second consecutive month that India's industrial production has turned positive... So, going ahead the pickup in demand and an eventual positive IIP figure will put India's GDP in a better position," Rahul Gupta, head of research- currency, Emkay Global Financial Services, said.