India's factory output expands at 7.5 percent in January

Manufacturing sector, which accounts for more than three-fourths of the entire index soared 8.7 percent in January as compared with 8.5 percent in December, led by an improved production of consumer durables and continued double-digit growth of consumer non-durables as well as capital goods.

According to Devendra Pant, Chief Economist at India Ratings, robust growth of consumption-related sectors will provide stability of Gross Domestic Product (GDP) growth in the next financial year as private final consumption expenditure (PFCE) is the biggest component while calculating GDP.

​ Capital goods output, which is a proxy to measure private sector investment activity, was 14.6 percent in January compared to 16.4 percent in December.

Consumer durables output escalated at 8 percent in January as compared with a meagre 0.9 percent rise in December, 2017, while consumer non-durables grew 10.5 percent in January from 16.5 percent jump a month ago.

The sequential improvement in IIP growth in January 2018 was chiefly driven by consumer durables and primary goods led by components such as two-wheelers and electricity, respectively, Aditi Nayar, Principal Economist at ICRA said.

“While an unfavourable base effect weighed upon the expansion of consumer non durables, it nevertheless remained in double-digits in January 2018, benefiting from the high growth in sugar, digestive enzymes and antacids, and steroids and hormonal preparations, which have a combined weight of 1.7 percent in the IIP,” Nayar said.

Electricity production showed an improvement, rising 7.6 percent in January, as compared 4.4 percent growth in December and 5.1 percent a year ago.

Mining activity’s growth further plummeted, growing 0.1 percent in January following December’s trend at 1.2 percent, as compared with a robust growth of nearly 8.6 percent a year ago.