India’s industrial output, measured by the Index of Industrial Production (IIP), rose to a 12-month high of 19.6% in May, up from 6.7% in April, latest data from National Statistical Office (NSO) shows.
Electricity generation rose 23.5% year on year in May while manufacturing output grew 20.6% and mining output rose 10.9%, NSO data released on Tuesday showed.
IIP had grown 27.6% in May last year, due to low-base effect.
“The strong growth in industrial activity for the second month in a row boosts confidence in the overall economic growth,” said Rajani Sinha, chief economist at credit rating agency CareEdge (formerly ).
“While the May growth figures have been pushed up by a favourable base, a sequential improvement across most categories is encouraging,” she said.
Rahul Bajoria, chief India economist at Barclays, said low base continues to drive up production growth.
Consumer non-durables output grew 0.9% in May while capital goods, which represents investments, rose 54%.
“Industrial growth has shown resilience amid cost challenges, with manufacturing, power generation and capital goods production benefiting from robust demand,” Bajoria said. “Still, profit-related headwinds are likely to build up in coming months.”
Aditi Nayar, chief economist at rating agency
, said, “The IIP growth exceeded the core sector growth after a gap of eight months.”
In terms of the use-based categories, all the sub-indices except consumer non-durables displayed a high double-digit growth in May 2022.
Consumer non-durables posted a weak 0.9% year-on-year (YoY) rise, reflecting the limited disruption caused to production of this category by the second wave of Covid-19.
“The growth rates over corresponding period of previous year are to be interpreted considering the unusual circumstances on account of Covid since March 2020,” the government said in a statement. IIP growth is expected to ease to 11-13% in June and into single digits later as growth moderates.
As per India Ratings, a significant pick-up in IIP is indicative of ongoing economic recovery, but its sustainability is still not a given in view of raging inflation and adverse global geopolitical situation.
