India Industry January 2016


India: Contraction in industrial production intensifies in January

March 11, 2016

Industrial production deteriorated in January, indicating signs of sluggishness in India’s economy. In January, industrial output fell 1.5% compared to the same month last year, which marked a more pronounced drop from December’s 1.2% fall. The reading surprised market analysts, who had expected a more modest 0.5% drop.

January’s deeper fall was driven by a sharp contraction in the manufacturing sector along with slower growth in mining output. Manufacturing production dropped 2.8% after falling 2.2% in December. Mining output lost steam, decelerating from a 2.7% increase in December to a 1.2% expansion in January. While growth in electricity production accelerated to 6.6% (December: +3.2% year-on-year).

On a use-based classification, the production of capital goods plummeted, while consumer goods recorded flat growth. However, production of intermediate and basic goods picked-up in January.

As a result of the monthly reading, the trend continued to point downward. Annual average growth in industrial production eased from December’s 3.3% to 2.9%.

FocusEconomics panelists expect industrial production to increase 6.8% in fiscal year 2016, which is unchanged from last month’s forecast. For fiscal year 2017, the panel expects industrial output to expand 7.3%.


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India Industry Chart

India Industry January 2016

Note: Year-on-year and annual average variation of industrial production index in %.
Source: Ministry of Statistics and Programme Implementation (MOSPI) and FocusEconomics calculations.

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