Steel production rose at the fastest pace in six months at 10.8%, but production levels were 2.35% lower than in October 2022. File | Photo credit: The Hindu
Output growth in India’s eight major sectors rebounded to 5.4% in November after a revised estimate of a 0.9% rise in October, the slowest in 20 months. This despite the fact that overall production levels in November 2022 remained the same as the previous month.
The recovery in the year-on-year growth rate bodes well for the country’s industrial production figures in November after a shocking 4% drop in October, with basic sectors making up about 40% of the index of industrial production (IPI).
The November IIP will be released on January 12 and economists expect the index to return to growth mode, albeit at a low number.
Cement production rebounded strongly from a 4.3% contraction in October to jump 28.6% in November, while coal and power generation levels accelerated to rise 12.3% and 12.1%, respectively. Steel production rose at the fastest pace in six months at 10.8%, but production levels were 2.35% lower than in October 2022. Fertilizer production increased by 6, 4% from November 2021 levels.
“The recovery is not generalized”
However, the recovery in these sectors was offset by a continued decline in crude oil, natural gas and refinery production. Refinery products hit a 21-month low, contracting 9.3% in November from a 3.1% decline in October. Crude oil production contracted for the sixth consecutive month, falling 1.1% in November, while natural gas production fell 0.7%, marking the fifth consecutive month of contraction.
“Compared to October 2022, the infrastructure industries index was flat in November 2022, but seasonally adjusted monthly growth momentum turned positive,” India Ratings economists Paras Jasrai and Devendra Kumar said. Pant, pointing out that the recovery is not yet widespread.
India Ratings expects PII to grow in the “low single digits” in November and core sectors to rise again by around 5% in December. “While power generation is up 13.3% through December 29, the steel and cement sectors are expected to record good growth in the near term thanks to sustained support from government investments and central government,” the economists pointed out.
“IIP can track basic sectors”
ICRA Ratings Chief Economist Aditi Nayar said the recovery from October’s lukewarm performance in core sectors was partly due to base effects, but the disaggregated trends were wide ranging, with four sectors showing a double-digit growth and three signaling an unpleasant contraction.
“While PII will also show an improvement of 3-4% growth in November compared to the contraction of the previous month, its performance could be lower than that of basic industries, given the drag imposed by higher exports. weak,” she said.
The Ministry of Trade and Industry, which publishes the basic industries index data, also revised the index upwards for August 2022, bringing the growth rate of production for that month to 4, 2% against 3.3% estimated previously.