India's industrial growth slumps to 2.4% in November, slowest pace in 8 months

In the penultimate month of 2023, growth was dragged down by the manufacturing sector, which saw its production rise by a mere 1.2 percent on a year-on-year basis after having posted an increase of 10.2 percent in October. The sharp slowdown in manufacturing output growth - which accounts for more than three-fourths of the IIP - was down to the holidays in November on account of festivals, which led to a reduction in working hours and, as a consequence, production.

However, other sectors too saw a fall in growth, with electricity generation increasing by 5.8 percent as opposed to 20.4 percent in October. Meanwhile, mining output was 6.8 percent higher, down from a growth of 13.1 percent in October.

In terms of the use-based classification of goods, production growth in November was lower for all six categories compared to October:

>> Primary goods: 8.4 percent versus 11.4 percent in October

>> Capital goods: -1.1 percent versus 21.3 percent in October

>> Intermediate goods: 3.5 percent versus 9.4 percent in October

>> Infrastructure goods: 1.5 percent versus 11.3 percent in October

>> Consumer durable goods: -5.4 percent versus 15.9 percent in October

>> Consumer non-durable goods: -3.6 percent versus 8.7 percent in October

Economists have been warning for some time that the IIP data will be drastically affected by seasonal factors, with Diwali occurring in November in 2023 and in October in 2022. This causes severe base effects. As such, they have argued that instead of monthly growth numbers, the average for October-November may be a better indicator of ground realities. If the average for the two months is taken, the Indian economy is performing far better now, with industrial output up 7.0 percent year-on-year in October-November 2023 compared to a growth of just 1.8 percent in October-November 2022.