Industrial Growth Slowed To 4-Month Low Of 6.7% In Sept, Pg19

Key Highlights:

• India's industrial output growth, measured by the Index of Industrial Production (IIP), slowed to a four-month low of 6.7% in September.
• The mining sector experienced its worst performance in three years, contracting by 6.2% year-on-year in September.
• Manufacturing sector, with the highest weightage in IIP, expanded by 7.6% in September, also its slowest growth in four months.
• The August IIP growth estimate was revised downwards to 7.8% from the provisional 8%.
• Industrial growth averaged 6.8% in the first six months of the current financial year, higher than 4.4% in the same period last year.

Detailed Insights:

• The slowdown in September's IIP was primarily driven by the significant contraction in the mining sector.
• Mining and quarrying output has contracted in eight of the nine months in 2026, with September's fall attributed to monsoon disruptions.
• Manufacturing, which accounts for 76% of the new IIP series, saw only 10 out of 23 sub-sectors perform better in September compared to August.
• Despite the moderation, other industrial sectors showed resilience, consistent with high-frequency indicators like GST collections and automobile sales.
• Manufacturing growth was notably driven by the auto segment, electrical machinery, rubber products, computers, electronics, and non-metallic machinery.
• Sectors like wearing apparel, chemicals, and pharmaceuticals experienced reduced growth due to global market disturbances affecting exports.
• Electricity and gas supply growth moderated to 11.2% in September, while renewable electricity growth slowed to 4.3%.
• Among use-based categories, consumer non-durables was the only segment to show improved output performance, growing 1.4% after two consecutive months of contraction.

Key Concepts Involved:

• Index of Industrial Production (IIP): An index that measures the changes in the volume of production of industrial products in India.
• Base Effect: The impact of the choice of a base period on the calculation of a rate or index, often leading to distorted growth figures.
• Monsoon Rains: Seasonal heavy rainfall, particularly in India, which can disrupt outdoor economic activities like mining and agriculture.