Hopes of Economic Revival Strengthens As IIP Turns Positive

After a consistent decrease in last three consecutive months India’s industrial production recovered from the contraction. India’s Index of Industrial Production (IIP), which is also called factory output, expanded by 1.8 per cent in November, official data released on Friday indicated. The expansion in factory output comes in the backdrop of a near flat output growth seen in the same time a year ago.

The growth in November is driven by the recovery in manufacturing activities which expanded by 2.7 per cent, compared to a 0.7 per cent contraction seen in the same time a year ago. The recovery in factory output was aided by the expansion in mining output which grew by 1.7 per cent in November. Electricity generation, however, contracted 5 per cent in November.

Deepthi Mathew, Economist, Geojit Financial Services said, "It is a good sign for the economy as IIP turns positive after three months of contraction. From the consumption point of view, it is welcoming that the consumer non-durables has turned positive. However, consumer durables are still in the negative territory, contracting for the last six months".

Rahul Gupta, Head of Research - Currency, Emkay Global Financial Services said, “For the first time in the last four months, November IIP growth rate has increased to 1.8 per cent from -3.8 per cent in October as production activity in cement and fertilisers has picked up. Due to a major slowdown in the economy, India’s IIP has been contracting since Aug 2019, however, a favourable base effect and improvement in PMI (Purchasers’ Managers Index) numbers has led to an expansion.”

While speaking to business leaders Prime Minister Narendra Modi had expressed confidence earlier this week that the economy has the strength to bounce back and that the goal of it reaching the size of $5 trillion was realistic.

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Hopes of Economic Revival Strengthens As IIP Turns Positive

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