A fragile momentum

Context:

• Recently there has been a hike of 5.2% in India’s Index of Industrial Production (IIP) for the month of January which seems to be a good New Year metric for last two months of contraction in the previous five months.

Towards growing economic sectors:

• Gross Value added for manufacturing slightly grows: With the Gross-Value Added (GVA) in the economy by the manufacturing sector shrinking 3.6% in the July to September 2022 and 1.1% in the October to December 2022 quarters, however has some chances to grow.  
• Slow start for the first quarter: To that end, January’s factory output numbers offer moderate, although not necessarily adequate, encouragement. 
• Past Concerns: As many as seven sectors have clocked output declines over the first 10 months of 2022-23, including electrical equipment, computers, pharma and the employment-intensive textiles, apparel and leather.

Indicators of IIP:

• Electricity and goods production: Double-digit growth in electricity and capital goods lifted the IIP, and an 8%-odd rise in mining and infrastructure goods has been recorded.
• Manufacturing sector: Manufacturing rose 3.7%, which is slightly better than December’s 3.1% increase, but 10 of 23 tracked sub-sectors recorded contractions in output.
• Textiles factories & technology sector: They pared production by over 11%, wood products fell by 12.6%, wearing apparel units slashed output by 22.3%, while computers and electronics manufacturing fell 29.6%.