Financial
Bank of Baroda: Analysis of IIP Growth by Jahnavi Prabhakar, Economist, BoB
The manufacturing sector drove this growth with a 5.5% expansion, supported by mining (4.4%). However, electricity output slowed to 2.4%, marking a three-month low.
India's Index of Industrial Production (IIP) recorded a notable improvement in January 2025, growing 5% compared to 4.2% in January 2024, exceeding market expectations. The manufacturing sector drove this growth with a 5.5% expansion, supported by mining (4.4%). However, electricity output slowed to 2.4%, marking a three-month low.
Key Highlights:
- Sector-wise Performance:
- Manufacturing: 5.5% growth (up from 3.6% in Jan’24), led by transport equipment, pharma, and motor vehicles.
- Mining: 4.4% growth (down from 6.6% last year).
- Electricity: 2.4% growth (down from 5.6% last year).
- Use-Based Classification:
- Primary Goods: 5.5% (6-month high).
- Infrastructure & Construction: 7% (boosted by cement output).
- Capital Goods: 7.8% (strong investment momentum).
- FMCG & Consumer Durables: Mixed performance—FMCG contracted by -0.2%, while durable goods slowed to 7.2% from 11.6% in Jan’24.
Outlook:
- Industrial production is expected to strengthen in Q4 FY25, backed by government capex and RBI’s policy measures.
- Risks include global tariff war concerns, which could impact exports.
Despite an overall moderation in FYTD IIP growth to 4.2% (from 6% last year), the industrial sector shows resilience with investment-led growth in the near term.
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