India's manufacturers barely increased production in November compared to the year before as factories closed for holidays a month later than in 2011, a Reuters poll found on Wednesday. The survey of 25 economists predicted that the index of
industrial production (IIP), measuring output at factories, mines and utilities, rose just 0.7 percent year-on-year in November following an 8.2 percent rise in October. Production was likely hit as Diwali, a widely observed religious festival in India that sees many factories shutting shop for a day or two, was celebrated in November last year. The year before it was in October.
"Comparatively there were lesser working days in November 2012 and hence the base effect," said Aman Mohunta, economist at Nomura.
Forecasts for the notoriously volatile indicator ranged from a contraction of 3.3 percent to growth of 6.3 percent. November's reading will be knocked by the previous year's IIP clocking a high 6 percent.
November's median expectation is lower than the average 1.1 percent growth seen so far in calendar 2012 and is significantly below the double-digit growth rates that IIP posted between late 2006 and early 2008.
"The momentum continues to be slow. We don't expect a spectacular pick up, at the same time we don't expect a further fall either," added Mohunta.
Mohunta saw November's factory output shrinking by 3 percent annually but expects it to grow around 0.5-1 percent in the next couple of months. Other economists share expectations of a pick up over the next few months.
"Infrastructure has been seeing some improvement. We are not seeing a very sharp rebound, but sentiment has improved," said Quant Capital Economist Bhupesh Bameta, adding that annual IIP growth is moving towards the 3-4 percent range in the near term. Infrastructure output, or core output data, which is typically released before the headline number and accounts for nearly 38 percent of overall industrial production, grew 1.8 percent year-on-year in November, sharply slower than in the
India has been plagued by sticky inflation, burgeoning deficits, a slowdown in domestic savings, a slump in exports and economic growth that is likely to be the worst in a decade.