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Economy

IIP Data: Drops by 0.4% in October

The Index of Industrial Production is at 261.5 today, a drop of 0.4%, for the first time in a very long time. Here’s what it looks like:

The bottom bars – the increase or decrease in the index are on the right axis.

The index seems to be catching up with it’s year back value and it seems like most “spikes” happen in March. Last October to December, the index was flat – and started moving rapidly upwards in Jan-March 08. March 2008 was the peak.

If we continue to deflate, we should not see a spike next year, and it’s entirely likely that IIP data continues to be negative all through till May next year (which is when data of March will be released).

This time, other than some basic goods and capital goods, everything has seen a decline – both month-on-month and year-on-year. October/November is when Diwali happens, so I would expect some decline due to holidays, and the fact that the drive up would have been earlier. (Can’t manufacture in October to sell in October)

Still, while this is bad, I think it’s going to get worse on the data front. Even if we stayed flat from we will have negative growth till March at least. the point is – how much worse will it get?

Note: these are tentative numbers, the final numbers are released later. It hasn’t been changed in a big way, at least in the recent past, so I believe we’ll be at 0.5% or lower.

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