Industrial output rebounds in September with 3.1% growth

Industrial production for September

India's industrial growth rebounded to 3.1 percent in September after contracting to a 22-month low of 0.1 percent in the previous month, as all three major industries recorded an improvement owing to stocking ahead of the festive season.

The manufacturing sector, which has a two-thirds weight in the index of industrial production, rose 3.9 percent from 1.1 percent in the previous month. The mining and electricity industries recorded positive growth compared with contraction in the previous month.

The rise follows the expansion in core sector activity, which rose 2 percent from a 1.6 percent contraction, a 42-month low, in August.

However, quarterly growth remained muted at 2.6 percent.

"Overall, the IIP growth in 2QFY25 stood at a seven-quarter low of 2.6% yoy due to the combination of high base effect (2QFY24: 7.8% yoy) and weather vagaries," said Paras Jasrai, senior analyst, India Ratings and Research.

Improving outlook 

While growth in the second quarter was muted, economists see some positive signs in the September numbers.

Both consumer durables and non-durables segments recorded a rise in the month, with the non durable segment recording 2 percent growth compared with 4.5 percent contraction in the previous month.

"The improvement in growth of consumer goods output is a positive for consumption demand in the economy," Jasrai noted.

Experts indicate that the trend is likely to continue in the current fiscal despite a high base.

"Balancing between the positive impact of the early onset of the festive season and an unfavorable base (+11.9 percent in October 2023), ICRA anticipates the YoY IIP growth to print at ~3.0-4.0 percent in October 2024," said Aditi Nayar, chief economist, ICRA.