The Index of Industrial Production (IIP) stated that industrial growth has increased to 19.6 per cent, as per the data mentioned by the Ministry of Statistics and Programme Implementation on 12 July, 2022. It was 7.1 per cent in May, indicating a rapid increase. In May 2021, the IIP growth rate was 27.6 per cent.
As per the economists, industrial growth has picked up sharply from April’s 7.1 per cent. In one year, the IIP fell sequentially from 145.6 in March 2021 to 11.5 in May 2021 due to the outbreak of the coronavirus. The pandemic led to the imposition of restrictions on movement.
As a result of the low base, the mining, manufacturing, and electricity sectors experienced sharp increases in output. Under the use-based classification, all types of goods except consumer nondurables were classified similarly.
The report by the Bank of Baroda (BOB) stated that research in industrial production led to the sharp improvement in the manufacturing sector output, which rose to 20.6 per cent from 5.8 per cent. The report mentions that capital goods production rose to 54 per cent from 13.3 per cent. Even the consumer durables segment noted a considerable jump of 58.5 per cent from 7.4 per cent. Primary goods output rose by 17.7 per cent from 10.1 per cent.
In May, consumer non durables production increased 0.9 per cent over April.
The electricity output increased by 23.5 per cent from 11.8 per cent. The BOB report mentioned that mining has shown a growth of 2.9 per cent. Initially it was at 8 per cent.
Rahul Bajoria, Barclays India's chief economist, said in a note that the resilient demand has boosted industrial growth, and the index is now 1.7 per cent higher than it was before the pandemic in May 2019. He added that there is room for moderation in the future and, due to the tempered demands and inflation, the activity levels may go down.
The report mentioned that a pick up in economic activity appears to be supporting the economy and it is very evident in the high frequency indicators like the GST collections , air passenger traffic and port cargo. However, the recovery is laden with challenges on the back of concerns surrounding inflation, the impact of the ongoing Russia-Ukraine conflict on energy prices, and concerns over the global economic slowdown.