India’s Industrial Growth Plunges to 17-Month Low in November

While there is an adverse base effect at work, the slowdown in the manufacturing sector was worse than what most economists expected.

New Delhi: India’s industrial output fell sharply in November, on the back of significant contraction in manufacturing activity and an unfavourable base effect.

According to government data released on Friday evening, the index of industrial production (IIP) rose by a meagre 0.5% in November 2018, compared to the 8.5% growth achieved in November 2017.

The IIP data is much lower than what most projections had estimated. A Reuters poll of economists had forecast growth of 4.1% and a Bloomberg poll of 22 economists had reckoned that the IIP numbers would show a growth rate of 3.6%.

In October 2018, industrial output grew by 8.1%.

According to data put out by the ministry of statistics and programme implementation, India’s manufacturing output contracted by 0.4% compared to 7.9% growth in October 2018.

Also read: Does India’s New Series GDP Data Overestimate Manufacturing Output?

While some of this weakness may be statistical in nature due to an adverse base effect – a strong 10.4% growth in November 2017  may have dampened year-on-year growth rates – the slowdown in the manufacturing sector was also more than expected.

Mining output rose by 2.7% year-on-year in November compared to 7% in October, while electricity generation rose by 5.1% compared to 10.8% last month.

(With Reuters inputs)

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