Industrial growth may have fallen to 7.4% in September

The Index of Industrial Production, or IIP, is a key indicator of India’s monthly activity levels.

India's industrial growth likely cooled to 7.4 percent in September on account of some weakening of momentum in activity. According to a Moneycontrol survey of 18 economists, industrial growth – as per the Index of Industrial Production (IIP) – likely fell in September for the first time in three months, with high-frequency data indicative of a slowdown.

In August, IIP growth had jumped to a 14-month high of 10.3 percent as activity improved sharply due to dry weather conditions. Industrial growth had come in at 3.3 percent in September 2022.

The Ministry of Statistics and Programme Implementation will release industrial production data for September later today at 5:30 pm.

"While the GST revenue grew by 10 percent year-on-year in September, all other high frequency indicators suggested some softening of growth momentum in the month of September," said Rupa Rege Nitsure, Group Chief Economist at L&T Finance.

Other high-frequency data also suggest a weakening of activity levels, with the manufacturing Purchasing Managers' Index—an indicator of month-on-month change in activity levels—declining to a five-month low of 57.5 in September from 58.6 in August.

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Also helping bring down the IIP growth number in September will be a change in base effect, which was favourable in August. The shift in the festival season this year – Diwali was in October in 2022 but falls in November in 2023 – means base effects will impart a fair degree of volatility to the industrial growth numbers in the coming months.