India's industrial production grows 10.3% in August, highest since June 2022

India's industrial production in August rose to 10.3 per cent on an annual basis after growing 5.7 per cent in July, official data showed on Thursday. Factory output measured in terms of the Index of Industrial Production (IIP) had contracted by 0.7 per cent in August 2022.

Mining output rose by 12.3 per cent in August 2023 after contracting 3.9 per cent in the same period a year ago.

Manufacturing output posted a growth of 9.3 per cent in August 2023 after contracting 0.5 per cent in August 2022.


Electricity output grew by 15.3 per cent in August this year after posting a growth of 1.4 per cent a year ago in the same month.

The IIP grew by 6.1 per cent in April-August 2023 compared to 7.7 per cent in the same period of 2022-23.

Here's what Dipti Deshpande, Principal Economist at CRISIL has to say on India's industrial production in August:

The sharp rise in the Index of Industrial Production (IIP) to 10.3% on-year in August from 6.0% previous month ties up with S&P Global Purchasing Managers Index (PMI) for manufacturing rising to a 3-month high of 58.6 in August, versus 57.7 in July.

The rise was broad-based across manufacturing sectors. Resilient domestic demand reflected in rising IIP growth of consumer durables and non-durables. Export demand revived in August and supported IIP growth for petroleum products, machinery and equipment, textiles, and pharmaceuticals.

Infrastructure and construction goods continued to record the highest growth, driven by strong spending by the government.

Industrial activity is expected to remain resilient but lose steam in the coming months.

The PMI for manufacturing moderated to 57.5 in September from 58.6 previous month.

In the coming months, the external environment will be a drag, as major western economies decelerate in the second half of 2023. The impact of uneven monsoon on rural demand remains to be seen. The transmission of rate hikes to lending rates could also temper domestic demand in the second half.

Overall, we expect GDP growth at 6% for this fiscal compared with 7.2% last year.