Growth in industrial production inched down to an eight-month low of 3.2 per cent in October from 3.3 per cent in the previous month, with the largest segment-- manufacturing--pulling down the expansion despite increase in demand due to the festival month. This does not give hope of any broad-based recovery after economic growth of 8.4 per cent in the second quarter of the current financial year.

       Going forward, November may see even further subdued activities as displayed by e-way bills generated. Generation of e-way bills fell to 61.15 million in November from 74.5 million in October. This may mean slow growth in industrial activities in the first two months of the third quarter of the current financial year which may drag down GDP growth in the third quarter. The Reserve Bank of India's monetary policy committee (MPC) has already revised down GDP growth to 6.6 per cent in the quarter compared to its earlier calculation of 6.8 per cent.

       It should, however, be noted that it is value added in industrial sales which are taken in GDP and not physical volumes of factory production as depicted by IIP.

       However, comparing the output, measured by the index of industrial production (IIP), is a bit tricky since the growth was revised from 3.1 per cent to 3.3 per cent in September. If one compares provisional estimates to provisional estimates, IIP growth in fact would be marginally higher in October compared to september.

       The industrial production was also up by a hefty 7.8 per cent in October over the corresponding month of pre-covid year of 2019-20.

       It was mainly mining, which revived after disruption caused by late rains in September, and electricity generation that pushed up the industrial growth, while manufacturing pulled it down. (see chart).

       Capital and consumer goods, especially durables ones, did not present any optimistic picture for the industrial sector.

       While capital goods output declined by 1.1 per cent in October from 2.4 per cent growth in September, consumer durables continued to contract at a higher rate of 6.1 per cent from 1.9 per cent over this period. Fast moving consumer goods also did not portray any rosy picture with the output rising by just 0.5 per cent in October from 0.2 per cent in the previous month.

       "The disaggregated data does not provide convincing signals of the recovery becoming durable and broad-basing further, with capital goods and consumer durables reporting a YoY contraction in October 2021," ICRA chief economist Aditi Nayar said.

       Contraction in capital goods may come in the way of further activities in the factory production.

       Barclays India chief economist Rahul Bajoria pinned hopes on higher government spending, especially capital expenditure during the second half of the current financial year to spur further industrial demand.