The faster growth suggests that the economy has picked up pace after a dismal second quarter.
“The positive aspect is that industrial activity has continued to strengthen following signs of softening in the second quarter of the current fiscal,” said Rajani Sinha, chief economist at CareEdge Ratings.
The expansion is in line with the first advance estimate of gross domestic product (GDP) that showed a recovery in the second half of FY25.
The Indian economy is expected to grow at a four-year low of 6.4% in FY25, according to official estimates. Manufacturing sector growth is expected to revive to 6.1% in the second half of the year from 4.5% in the first half.
“A combination of a favourable base effect and the greater momentum in the manufacturing sector pushed the industrial growth,” said Paras Jasrai, senior economic analyst at India Ratings and Research (Ind-Ra).He said all three sectors — manufacturing, mining and electricity — and overall IIP have been on a rising trend since September 2024, but cautioned it was too early to term this as an industrial demand revival.Madan Sabnavis, chief economist at Bank of Baroda, said it needs to be seen if this growth can be sustained in the coming months as it will help in boosting the GDP growth number for the year.
Average growth in the first eight months of the current fiscal year was 4.1%, lower than 6.5% in the corresponding period in the year before.
Manufacturing sector growth was at an eight-month high of 5.8% in November.
Growth in mining and electricity rose to a four-month high of 1.9% and 4.4%, respectively, in November.
Within manufacturing, 18 out of 23 sectors recorded positive growth in November 2024, compared with the same month last year. Basic metals led with growth of 7.6%, followed by electrical equipment (37.2%) and other non-metallic mineral products (12%).
According to use-based classification, consumer durables recorded the highest growth at 13.1%, getting a boost from the negative base effect. Infrastructure and construction goods output rose at a 13-month high of 10%, followed by capital goods (9%), intermediate goods (5%), and primary goods (2.7%).
Consumer non-durable growth was at 0.6%.
With signs of improvement in rural demand, Sinha of CareEdge Ratings pointed to the performance of consumer non-durables.
“Given the criticality of consumption and investment for the overall industrial activity, these remain the key focus areas to watch out for in the upcoming budget,” she said.
The rise in factory output was supported by a fourmonth high 4.3% growth in the eight core industries in November, according to data released last month. The eight sectors account for 40.27% weight in the IIP.
The effects of good agricultural output, easing food inflation and improving government capex are expected to support growth in the second half of this fiscal, said Dharmakirti Joshi, chief economist at Crisil.
“That said, government capital expenditure support is expected to remain lower than last year given fiscal consolidation,” he said.
“For consumers, elevated interest rates and tighter lending conditions are expected to cap spending on discretionary items.”
OUTLOOK ICRA projects year-on-year IIP growth at 3.5% in December due to an unfavourable base. Ind-Ra expects growth of around 3%.
“If this tempo is maintained, (IIP) growth can end at 5-5.5% for the year,” said Sabnavis.
Content Source: economictimes.indiatimes.com