November IIP at -0.1% versus 8.2% in October

NEW DELHI: The Index of Industrial Production ( IIP) for the month of November contracted to (-) 0.1% versus a robust expansion of 8.2% in October. This is below the ET Now poll estimates of 0.1%

While the manufacturing sector grew at 0.3% versus 9.6%, the electricity sector exhibited a growth of 2.4% versus 5.5% in October. Capital goods output declined by 7.7 per cent in November, as against a contraction of 4.7 per cent in same month in 2011.

In the April-November period, industrial production expanded an annual 1.0 percent. Output was depressed by weak investments as well as the Diwali holiday, which was in November last year, whereas in 2011 it fell in October. Diwali is one the biggest festivals in India, with many factories shutting for several days.

"The correction in the November headline (industrial production) was largely priced in on passage of festive demand and manufacturers' possibly drawing down on inventories rather than stepping up production towards end-2012," said Radhika Rao, economist at Forecast Pte, Singapore.

Asia's third largest economy is on track to expand at its slowest pace in a decade for the fiscal year that ends in March, weighed down by a combination of weak investment and consumer demand.

Reacting to the numbers, AM Naik of L&T told ET Now that the Indian manufacturing sector is suffering because of China. "Job creation in India will go down from here," he said.

Planning Commission Chairman Montek Singh Ahluwalia said that the November IIP data is in line with expectations. "October's IIP growth was on the back of last year's growth trend," he said.