Factory Output Growth in India

Factory output growth in India slowed to a six-month low of 2.9% in February due to a high base effect and sectoral deceleration, according to the National Statistics Office (NSO).

Index of Industrial Production (IIP)

• Factory output measured by IIP grew by 5.2% in January and 5.6% in February 2024.
• Manufacturing output, accounting for 77.6% of IIP, decreased to 2.9% in February from 5.8% in January.
• Mining output grew by 1.6% compared to 4.4% in January and 8.1% in February 2024.
• Electricity output increased by 3.6% in February, up from 2.4% in January, but lower than 7.6% a year ago.

Capital and Infrastructure Goods

• Capital goods output, an investment indicator, slowed to 8.2% from 10.3% in January but was higher than 1.7% in February 2024.
• Infrastructure goods output grew at 6.6% in February, slightly lower than the previous month but showing sustained growth.

Consumption Trends

• Consumer durables output reduced to 3.8% in February from 7.2% the previous month.
• Consumer non-durables remained negative at (-2.1%) for the third consecutive month.
• Monitoring consumption trends remains vital due to ongoing uneven domestic demand.

Future Economic Projections

• Economic growth expected to be supported by a recent rate cut by the Reserve Bank of India and easing food prices.
• An increase in power demand was observed in March 2025, with a 6.6% rise.
• Government spending is anticipated to increase to meet capital expenditure targets.

Sectoral Performance

• Out of 23 manufacturing sectors, 14 exhibited growth in February.
• High growth sectors included computer, electronic and optical products (10.6%), electrical equipment (9.3%), and motor vehicles.
• Non-performing sectors were leather and related products ((-9.4%)), paper and paper products ((-9.1%)), and printing ((-8.6%)).

Overall Output Growth

• Cumulative industrial output growth during April-February was 4.1% against 6% in the previous year.
• The electricity sector continues to be a strong performer with 5% growth.

In conclusion, while industrial output growth has experienced recent volatility, careful monitoring, especially of investment versus consumption trends, is essential for sustained economic development.