IIP growth likely to pick up in Jan: Kotak report

Industrial output declined to a 4-month low of 0.4% in December.

The Dollar Business Bureau

Industrial activity in India, the figures for which are still to be released, is likely to see an upward trend in the month of January as there is an improvement in the overall economic scenario since December, according to a report. 

Industrial output declined to a 4-month low of 0.4% in December, mainly due to fall in the production of consumer goods and capital goods. 

“The contraction in IIP (Index of Industrial Production) was partially due to base effects, but largely by production contraction was due to demonetisation, particularly in automobile output,” Kotak Institutional Equities said in its research note. 

Since then, the scenario is expected to have improved and IIP growth should witness some uptick in the month of January, it added. 

“January is likely to have a better IIP print, especially from the consumer durables front,” said Suvodeep Rakshit, Economist at Kotak Institutional Equities. 

In November, the industrial production was 5.7% and did not take into account the impact of demonetisation. 

In the meantime, Finance Minister Arun Jaitley had said that the decline in industrial output in December was the result of the fallout of demonetisation but he expected a pick-up and more expansion in the coming months. 

“November and December (IIP figure) cannot be the representative of a period of this year. This is the demonetisation period and compared to November, December more challenging for the reason that in many areas old currency was allowed to operate. In December, it had gone away,” he had said.