Index of Industrial Production: IIP growth slips to 4.3% in December, down from 7.3% in November, shows Govt data

IIP growth data: India's factory output based on the Index of Industrial Production (IIP) grew by 4.3 per cent year-on-year in the month of December, Ministry of Statistics and Programme Implementation data showed on Friday. Although, the growth rate has eased as compared to November, when it stood at 7.3 per cent.

“IIP growth eased to 4.3 per cent in Dec’22 from 7.3 per cent in Nov’22, led by a sharp moderation in manufacturing. Within manufacturing, a broad-based slowdown was visible led by computers, wearing apparel and tobacco,” said Aditi Gupta, economist, Bank of Baroda.

The data released by the National Statistical Office (NSO) showed that the manufacturing sector's output grew by 2.6 per cent in December 2022.

Mining output rose by 9.8 per cent and power generation increased by 10.4 per cent during the month under review.

As per the Index of Industrial Production (IIP), the industrial growth during 2021-22 was 11.7 per cent over the corresponding period of the last year. Whereas, annual average growth of IIP was 3.4 per cent and 3.2 per cent respectively during the period 2009-14 (Base year: 2004-05) and 2014-19 (Base Year: 2011-12), Minister of State for Commerce and Industry, Som Parkash had said in reply to a question in the Parliament on February 8.

As pointed out by the ministry, the government has undertaken various steps to boost industrial performance. These include introduction of Goods and Services Tax (GST), reduction in corporate tax, interventions to improve ease of doing business, measures for reduction in compliance burden, policy measures to boost domestic manufacturing through public procurement orders, Phased Manufacturing Programme (PMP), FDI policy reforms.

 “Within use-based, while primary goods output accelerated to 8.3 per cent in Dec’22 from 4.8 per cent in Nov’22, all output in all other segments lost momentum,” added Gupta.

The ministry mentioned in their release that the growth is primarily driven by the MSME sector as the government has taken several measures to support the sector.  The Emergency Credit Line Guarantee Scheme (ECLGS), with a provision of Rs 3 lakh crore which has been increased to Rs 5 lakh crores, is in the form of a fully-guaranteed emergency credit line to monitor lending institutions.

 “Financial support has been given to the stressed MSMEs with an infusion of Rs 20,000 crore equity support through Subordinate Debt. Fund of Funds created to infuse equity worth Rs.50,000 crore in the MSME Sector by setting up Rs 10,000 crore Corpus Fund,” mentioned the release.  

While the government pointed out that the MSME sector is driving the growth, economists believe that the slowing of growth pace is due to external headwinds

According to economists, IIP growth in December came in at 4.3 per cent which is lower than expectation of 5 per cent. With this growth of 4.3 per cent overall growth for the 9 month period April-Dec is 5.4 per cent.