India’s industrial output growth slowed in September, with the manufacturing sector, consumer durables, and non-durables remaining sluggish. According to the data released by the National Statistical Office (NSO), the index of industrial production (IIP) rose by 5.8% in September, which was slower than the previous month’s growth rate of 10.3%. The manufacturing sector grew by 4.5% compared to a 2% expansion in the previous year. The capital goods sector witnessed a slowdown in growth from 11.4% to 7.4% in September, whereas the consumer durables sector grew by 1%, and the consumer non-durables sector rose by 2.7%.

This slowdown in industrial output growth reflects a moderation in demand. The Covid-19 pandemic and the global economic slowdown have impacted demand, along with shifts in festive season dates and monsoon rains. The manufacturing sector, particularly export-intensive items like wearing apparel and leather products, showed weakness. Additionally, computer and electronic products and chemical industries experienced persistent weakness. Within the use-based classification, the production of consumer goods decelerated sharply, although there was modest growth in the consumer durables component.

Rajani Sinha, chief economist at ratings agency CareEdge, expressed concern about the sharp sequential deceleration in the manufacturing and electricity sectors. However, it should be noted that the industrial sector has shown signs of recovery after the initial blow from the pandemic.

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