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Below Quote on IIP Data By Mr. Vivek Rathi, Director Research, Knight Frank India.

“Softening in industrial production growth rate to 4.3% in Dec 2022, is primarily emerging from softening in manufacturing sector output. Though, the indicators such as manufacturing PMI, capacity utilization etc. which gauge the performance of manufacturing sector, have been strong, the same quantum of strength is not witnessed in industrial production of manufacturing sector.

Infrastructure/construction goods output grew by 8.2% in Dec’22 and had grown consistently in the preceding months as well, undeterred by sharp rise in raw material prices and interest rates. Going forward, construction sector which includes both real estate as well as infrastructure would be the key to India’s economic growth. The union government’s significant capex push especially to infrastructure should aid production of construction goods. However, for the long term sustained economic growth, consumption demand is needed to strengthen. Thus, 10.4% contraction in consumer durable output is concerning.

Increased inflation levels has reduced household disposable income and central bank response that has increased consumer interest rate can potentially impact many discretionary items. Categories like housing, which is enjoying favourable consumer sentiment, is largely undeterred from these pressures as yet but government and central bank should now closely watch the pressure on homebuyers to avoid derailment of momentum in this key consumption and economic category.”