Industrial Output Grows 8% in August on the New 2022-23 Base, but Consumer Non-Durables Lag

The news

New Delhi. India’s industrial production grew 8% year-on-year in August 2026, up from 7.4% in July, according to Index of Industrial Production (IIP) data released on Monday, September 28, by the Ministry of Statistics and Programme Implementation (MoSPI). The IIP measures the volume of output of factories, mines and utilities against a base year; this is the fifth monthly release on the revised 2022-23 base, The Economic Times reports, and industrial output had grown 4.7% in August 2025. Manufacturing, which accounts for 76.1% of the index, grew 9%, up from 8.2% in July; MoSPI said the sector recorded growth of 8% or more for the last three consecutive months. Eighteen of 23 industry groups expanded, led by electrical equipment (30.9%), motor vehicles, trailers and semi-trailers (25.2%) and other transport equipment (25.3%). Electricity and gas supply rose 12.3%, from 8.7% in July; electricity generation grew 13.3% but gas supply contracted 2.4%, which Devendra Pant of India Ratings said underlined “the continued impact of the West Asia crisis”. Mining and quarrying, over a tenth of the index, shrank 5.6%, though minerals including rare earths grew 5%, said Madan Sabnavis of Bank of Baroda. Water supply, sewerage and waste management rose 6.3%. By use, capital goods grew 16.9% (19% in July) and intermediate goods 13.7% (10.4%). The weak spot, The Indian Express reports, is consumption: consumer durables such as appliances and vehicles rose 11.1% after 12% in July, but non-durables, mainly fast-moving consumer goods (FMCG) like soap and packaged food, grew only 2.1%. Rajani Sinha of CareEdge Ratings called “the feeble performance of consumer non-durables” concerning. Part of the strength is a base effect: growth is measured against August 2025, when, says ICRA’s Rahul Agrawal, firms cut inventories ahead of GST rate cuts announced in early September 2025, so the comparison month was low. Compared with July, output actually fell: overall by 1.8% and manufacturing by 1.4%; mining fell 9.2%, usual in the monsoon, and only electricity and gas improved, by 0.3%. IIP growth averaged 7.7% in July-August against 6.2% in the first quarter (ET) and 6.7% in April-August against 4.2% a year earlier (IE); June’s 8.8% was the highest since March 2024. With April-June GDP growth at 7.8%, Sabnavis said India could grow 7-8% this year. The IE notes household purchases are increasingly on credit: bank personal loans rose 16.2% and non-bank personal loans 21.4% by end-July. Syllabus: GS3 on growth, industry and the measurement of the economy.

Static syllabus linkage

1. The IIP is a volume index compiled monthly by the National Statistics Office. The Index of Industrial Production is compiled and released by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation. It is a fixed-base volume index built on the Laspeyres formula, which means output in each month is compared with a base year using that base year’s weights. It tracks the physical quantity of production of a basket of items, not their value, so it shows short-term movements in industrial activity. Because it is a year-on-year comparison, a weak month a year earlier can inflate growth, which is called a base effect.
2. Base-year revision updates weights and the item basket to reflect today’s economy. Over time new products appear, old ones fade and the relative size of industries changes, so an index based on an old year misrepresents the economy. A base revision updates the basket of items, the sample of factories and the weight of each industry. The previous series used 2011-12 as base; the new series uses 2022-23, aligning industrial statistics with other revised macro data. On the new base, manufacturing carries 76.1% of the index, and the index now reports four sectors: mining and quarrying, manufacturing, electricity and gas supply, and water supply, sewerage and waste management.
3. Use-based classification shows where the output goes. Besides the sectoral classification, the IIP groups output by end use into primary goods, capital goods, intermediate goods, infrastructure or construction goods, consumer durables and consumer non-durables. Capital goods such as machinery signal investment; intermediate goods such as components signal future production; consumer durables such as appliances and vehicles reflect discretionary spending; and non-durables such as food, soap and medicines reflect everyday mass consumption. Reading the use-based numbers together tells whether growth is investment-led or consumption-led, and whose consumption.
4. The eight core industries are a separate index with a large weight in the IIP. The Index of Eight Core Industries covers coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, and is compiled by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade (DPIIT). On the 2011-12 base these industries together carried about 40% of the weight of items in the IIP, with refinery products the largest. Because the core index is released earlier, it is used as an early indicator of the IIP. The IIP also differs from manufacturing gross value added (GVA) in the national accounts: the IIP measures volume of gross output, largely from organised units, while GVA measures value added after inputs, so the two can diverge.

Why UPSC loves this

1. GS3 asks about growth, its quality and its measurement. The syllabus covers growth and development and the Indian economy’s planning and mobilisation of resources. Questions have repeatedly asked whether growth is jobs-rich and consumption-broad. The contrast between 11.1% growth in durables and 2.1% in non-durables is data a candidate can use to discuss an uneven, or K-shaped, recovery.
2. Prelims tests who compiles which index. UPSC has a habit of testing which body compiles an index: the IIP by the NSO under MoSPI, the core index by the Office of the Economic Adviser in DPIIT, CPI by the NSO, and WPI by the Office of the Economic Adviser. Base-year changes, the eight core industries and use-based categories are natural questions this year.
3. Statistical reform is itself a syllabus theme. With the GDP, CPI and IIP series being rebased, questions on the credibility and timeliness of official statistics have become more likely in both GS3 and the Essay paper.

Analysis

1. 8% is real but flattered, and the month-on-month fall matters. The headline is strong, and growth has been broad, with 18 of 23 industry groups expanding. But ICRA explains that August 2025 was depressed by inventory cuts before the GST rate changes, so this August is measured against a low base. The month-on-month figures are the check: overall output fell 1.8% and manufacturing 1.4% from July. Part of that is monsoon seasonality, especially in mining. The fair reading is that industry is growing well, but the momentum is not accelerating as the 8% suggests.
2. The consumption split tells us whose demand is strong. Durables grew 11.1% while non-durables grew 2.1%. Durables are bought by better-off households and increasingly on credit, with bank personal loans up 16.2% and non-bank personal loans up 21.4%. Non-durables are what every household buys every week. Weak growth there, with a weak monsoon and rising prices, points to strain in rural and lower-income budgets. A recovery led by credit-funded purchases of the well-off is less durable than one led by rising wages, and more exposed if interest rates rise, which the markets now expect.
3. Capital and intermediate goods suggest an investment cycle, with a caution. Capital goods grew 16.9% and intermediate goods 13.7%, and electrical equipment grew 30.9%. This fits an economy investing in power, grids and vehicles, and India Ratings points to domestic and export demand for electrical goods. The caution is that capital goods growth slowed from 19% in July, and the oil shock is raising input costs and interest rates, which can make firms defer investment. If private capex is to carry growth, it will need steady demand from the non-durables side too.
4. The energy shock is already visible inside the index. Gas supply contracted 2.4% and gas-based generation fell even as electricity generation grew 13.3% on renewable and non-renewable sources. That is the West Asia war in the data: expensive, scarce LNG pushes utilities away from gas. It also shows the value of renewable capacity as an energy-security hedge. The downside is that gas-dependent industries such as fertilisers and city gas face costlier inputs, which will show up in later months.
5. A new base needs time before it earns trust. This is only the fifth release on the 2022-23 base, and the Indian Express text even prints last August’s growth confusingly, which shows how easy it is to misread new series. Revisions in the first year are normal, and comparisons with the old series are not like-for-like. Policymakers should read the IIP with GST collections, electricity demand and credit data rather than alone. The strength of the new series is that its weights reflect today’s economy, with manufacturing at 76.1%, which makes it a better guide once a full year of data is available.

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