Sept IIP at 0.7 %; pain ahead with currency demonetisation

Index of Industrial Production, which is a measure of the growth in the economic activities of the country was released on Friday, November 11, 2016. IIP for the month of September stands at 0.7 per cent, recovering from the prior month’s figure of (-) 0.7 per cent.

In the prior month of August, the IIP had fallen by 0.67 per cent. Industrial production in the first half of current fiscal contracted by 0.1 per cent, as against 4 per cent growth in year ago period.

The `manufacturing’ sector, which represents more than 75 per cent of the industrial index, has grown 0.9 per cent in September,  up from a contraction of (-) 0.2 per cent in the month of August.

Another important constituent i.e capital goods output, which gauges capacity additions of companies, has also contracted to 21.6 per cent in the month of September from 22.1 in August.

However, in the latest data, consumer staples output has grown by a healthy 14 per cent in September as against 2.2 per cent achieved in the previous month.

According to analysts' estimates October IIP numbers are expected to be on the strong side, courtesy festival season. However, the situation may turn sour thereafter from November, which would clearly have a negative impact of currency demonetisation.