India’s factory output surged 19.6 pc in May

New Delhi, July 12 (Mayank Nigam) Driven by manufacturing and electricity, India’s factory output measured in terms of Index of Industrial Production (IIP) surged 19.6 per cent year-on-year in May 2022, as compared to 7.1 per cent in the previous month. The IIP had recorded 27.6 per cent growth in May 2021, mainly on account of low-base effect due to the Covid-19 pandemic. According to data released by the Ministry of Statistics & Programme Implementation (MoSPI) on Tuesday, manufacturing sector grew at 20.6 per cent in May, 2022.

Electricity and mining recorded 23.5 per cent and 10.9 per cent growth respectively during the month under review. At use-based levels, primary goods production climbed 17.7 per cent in May 2022 while capital goods recorded 54 per cent growth. Intermediate goods, infrastructure/construction goods and consumer durables rose 17.9 per cent, 18.2 per cent and 58.5 per cent respectively in May this year. The consumer non-durables sector inched up 0.9 per cent during this period. Commenting on the IIP data, ICRA Chief Economist Aditi Nayar said that relative to the pre-Covid level of May 2019, the performance was decidedly mixed, with capital goods, consumer durables and consumer non-durables trailing, and primary goods, infrastructure goods and intermediate goods posting a rise in May 2022.

“In line with the moderation in YoY performance recorded by most high frequency indicators in June 2022, we expect the IIP growth to ease to 11-13 per cent in that month. Industrial growth is subsequently expected to moderate to single digits in Q2 FY2023, as the base effect dissipates,” she said. Sunil Kumar Sinha, Principal Economist, India Ratings and Research said that a significant pick up in IIP growth though is indicative of ongoing economic recovery, but its sustainability is still not a given in view of raging inflation and adverse global geopolitical situation. “A year-on-year growth in high single or double digit for at least 5-6 months may perhaps would be required to believe that industrial growth is finally on a path of sustained recovery,” he said.