Low base effect, along with rising demand, pushed India’s industrial output higher by 11.50 per cent, on a year-on-year basis.
The Index of Industrial Production (IIP) for July rose by over 11 per cent from a decline of 10.5 per cent reported for the like month a year ago. Last year, while the country observed a full-fledged lockdown, the same was partially imposed across different regions of the country.
However, the production rate was flat on a sequential basis.
“For the month of July 2021, the ‘Quick Estimates of Index of Industrial Production’ with base 2011-12 stands at 131.4,” the Ministry of Statistics and Programme Implementation said.
“The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of July 2021 stand at 104.6, 130.9, and 184.7, respectively.”
Among the major use-based segments, the July data, on a YoY basis, showed that manufacturing of primary goods grew by 12.4 per cent from (-) 10.8 per cent, while capital goods production rose 29.5 per cent from (-) 22.8 per cent, and intermediate goods increased by 14.1 per cent from (-) 10.7 per cent.
Similarly, the production of infrastructure or construction goods rose by 11.6 per cent from (-) 8.2 per cent, and consumer durables’ production grew by 20.2 per cent from (-) 23.7 per cent.
However, the sub-segment of consumer non-durables showed a negative growth of (-) 1.8 per cent from a rise of 1.8 per cent.
“The pace of IIP growth decelerated to 11.5 per cent in July 2021, with the healthy sequential upmove benefitting from easing restrictions and rising mobility, being dwarfed by the continued normalisation of the base,” ICRA Chief Economist, Aditi Nayar, said.
“Industrial output in July 2021 trailed the pre-Covid level by a marginal 0.3 per cent, on account of the drag imposed by consumer durables on manufacturing, whereas mining and electricity posted a healthy growth relative to their July 2019 levels. On an encouraging note, all the use-based categories except consumer durables recovered to or above their pre-Covid levels in July 2021.”
India Ratings and Research’s Principal Economist, Sunil Kumar Sinha, said: “The industrial output, though still below the pre-Covid period (February 2020), is showing a relatively faster rebound than post Covid 1.0. Several other high frequency indicators such as power generation, fuel consumption, auto sales, railway freight etc were already indicating faster recovery.”
“The momentum which had been built up after Covid 2.0 related lockdown was lifted seems to have continued in July with month-over-month increase of over 7 per cent from June 2021.”