NEW DELHI – India’s industrial output rose a bigger than expected 5.2 percent in January compared with the same month last year as strong domestic urban demand boosted electricity generation and manufacturing, despite weakening exports.
Analysts in a Reuters poll had predicted an increase of 5 percent in industrial output for the month. The rise followed upwardly revised annual growth of 4.7 percent in December, according to the Ministry of Statistics data.
Some economists expect industrial output growth to remain strong following a recovery in rural demand as reflected in rising sales of autos including motor-bikes and scooters.
India’s industrial output, comprising production by factories, electricity generation and mining, has been impacted by slowing global demand and rising interest rates in recent months.
Manufacturing, which accounts for about 15 percent of the Indian economy, has also been hit by a fall in exports but rose 3.7 percent year-on-year overall in January.
India’s merchandise exports in January fell 6.6 percent year-on-year to $32.91 billion.
The Reserve Bank of India has raised its benchmark interest rate by 250 basis points since last May to contain inflation, pushing up borrowing costs for consumers and businesses.
Capital goods production, a proxy for factory activity, rose 11 percent year on year, accelerating from a 7.6 percent rise the previous month, while consumer durables’ production contracted 7.5 percent year-on-year after a 10.4 percent contraction the previous month, the data showed, reflecting a continuing slowdown in consumer demand.
Production of textile garments, tobacco products, basic metals and chemicals contracted between 7 percent and 30 percent in January from a year earlier, data showed, while mining output rose 8.8 percent, slower than 9.8 percent growth the previous month.
India’s total passenger vehicle sales grew 11 percent in February from a year earlier, separate data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday showed.
India’s economy, the world’s fifth-largest, grew 4.4 percent year-on-year in the fourth quarter, down from 6.3 percent the previous quarter, and the government expects the economy to post annual growth of 7 percent for fiscal 2022/23 ending this month.
India’s economic growth slowed further in the December quarter as pent up demand eased and weakness in the manufacturing sector continued.
Asia’s third largest economy recorded year-on-year growth of 4.4 percent in October-December, down from 6.3 percent in July-September, data released by the government showed. The sharp fall in the year-on-year growth rate is also partly due to a fading of pandemic-induced base effects and revision to last year’s growth, economists said. — Reuters
