With the base effect waning off, industrial output slowed to a 3.1 per cent growth year-on-year in September, as compared to a 11.9 per cent jump in August, data released by ministry of statistics and programme implementation showed.

       The 3.1 per cent year-on-year growth was mainly driven by a jump in mining and manufacturing activity.

       Industrial production in volume terms, as measured by the index of industrial production (IIP), grew 4 per cent when compared with September 2019 or pre-covid level. However, on a sequential basis, it contracted 2.6 per cent.

       “As anticipated, IIP growth recorded a broad-based plunge to an insipid 3.1 per cent in September 2021, reflecting the base effect, disruption caused by heavy rainfall, and the impact of semiconductor shortages on auto output, despite the pre-festive season inventory buildup suggested by the GST e-way bill data,” Aditi Nayar, chief economist at ICRA said.

       The cumulative growth during April-September (2021-22) was 23.5 per cent, compared to a contraction of 20.8 per cent during the same period a year ago.

       Manufacturing sector output, which accounts for more than 77 per cent of the entire index, grew 2.7 per cent YoY in September as compared to a 0.4 per cent growth last year. On a sequential basis, it contracted moderately at 0.5 per cent.

       Growth in electricity generation stood at 0.9 per cent YoY in September as compared to 4.9 per cent growth a year ago. Mining activity, which accounts for over 14 per cent of the entire index, grew 8.6 per cent YoY, as compared to 1.4 per cent growth in September 2020.

       “At the broad classification level the IIP data of September 2021 shows some interesting trend. Despite registering YoY growth in September 2021, the output level of both the segments (mining and manufacturing) are still lower than the pre-Covid period (February 2020). On the other hand, electricity grew only 0.9 per cent YoY in September 2021 but its output level is higher than the pre-Covid period,” Sunil K Sinha, Principal Economist at India Ratings said.

       Consumer durables output witnessed 2 per cent contraction in September as compared to a growth of 5.3 per cent during the same period last year. However, on a sequential basis, the consumer durables segment grew 6.7 per cent. Consumer non-durables output witnessed a degrowth of 0.5 per cent in September, as compared to a 2.4 per cent growth last year, and 0.9 per cent contraction as compared to August.

       “The average YoY growth figures of primary, capital, intermediate, infrastructure, consumer durable and non-durable goods for the month of August and September 2021 are 10.8 per cent, 10.6 per cent , 7.6 per cent , 9.2 per cent , 3.0 per cent and 2.3 per cent . No doubt festival demand is finding reflection in the YoY growth, but consumption demand after Covid 1.0 and 2.0 still has not reached to the level that industrial output could reach or surpass the pre-COVID period. India Ratings and Research (Ind-Ra) believes revival of industrial output will remain a challenge in the near term,” Sinha said.

       Capital goods output, which is reflective of the private sector investment scenario, grew 1.3 per cent, as compared to 1.2 per cent contraction last year. In the construction and infrastructure segment, the growth was 7.4 per cent YoY as compared to 4 per cent growth last year.

       “Going forward, for sustainable economic momentum in 2022, the critical driver would be boost to consumer spending through demand stimulating government policies. Eventually private investment will also improve as capacity utilisation level improves going forward,” Rajani Sinha, Chief Economist & National Director at Research, Knight Frank India said.