Factory output grew by just 1.3% in January despite favourable base

India’s factory output growth remained in low single digit in January despite a favourable base as Omicron led lockdowns across the country reduced demand for goods and services.

Data released by the National Statistical Office on Friday showed the index of industrial production picked up marginally to 1.3 per cent in January from 0.7 per cent in the preceding month as manufacturing output grew 1.1 per cent. Mining and electricity output registered 2.8 per cent and 0.9 per cent growth respectively.

Among used based industries, while capital goods which is a proxy for investment demand and consumer durables contracted 1.4 per cent and 3.3 per cent respectively in January, consumer non-durables expanded 2.1 per cent during the month.

S&P Global Ratings on Wednesday cautioned that rising oil prices may dampen economic growth and cause a sizeable current account deficit (CAD) in large energy-importing countries like India.

The ratings agency retained India’s economic growth at 7.8 per cent for FY23. It said that high inflation, weaker demand and increased uncertainty arising from the Russia-Ukraine conflict may slow the economic and fiscal recoveries much more than currently expected for many countries.

S&P revised its forecast for average Brent crude prices for 2022 to $85 per barrel from its prior assumption of $75. Crude oil prices have been on a boil with Brent crude touching $131.31 on Wednesday.

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