IIP growth at 19.6% in May 2022, due to favorable base effect of May 2021

13 Jul 2022 , 09:44 AM

According to statistics issued on July 12 by the Ministry of Statistics and Programme Implementation, India’s industrial growth increased to 19.6% in May from 7.1 % in April, according to the Index of Industrial Production (IIP).

Despite being boosted by a favorable base effect, the pace of industrial growth in May was the highest in a year at 19.6 %.

IIP expansion in May 2021 was 27.6%. Due to a low base, economists anticipated that industrial growth would increase considerably from April’s 7.1 %. As the nation was enveloped by the second wave of the coronavirus pandemic, which caused the re-imposition of restrictions on travel and activity in various locations, the IIP was showing dramatic sequential decreases in the prior year, from 145.6 in March 2021 to 115.1 in May 2021.

The increase rates compared to the same time the previous year are should be understood “given the unique conditions on account of COVID 19 pandemic since March 2020,” according to the statistics ministry.

Due to the low base, all three industries–mining, manufacturing, and electricity–saw a significant increase in production growth in May. With the exception of consumer non-durables, the same was true for all categories of commodities included in the use-based classification.

Compared to an increase of 0.3 % in April, production of consumer non-durables increased by 0.9 % in May.

Barclays attributed the May IIP rise to robust activity and the low base effect. “Resilient demand has helped to promote the turnaround in industrial growth; as of May 2019, the index is 1.7 % higher than it was prior to the pandemic. Production has so far been boosted by strong export growth, increased mining and fertilizer production, and simpler supply challenges for manufacturing “Chief economist at Barclays India, Rahul Bajoria, stated in a note. “However, we anticipate room for restraint moving forward, as tempered demand and rising costs are likely to restrict activity levels,” the statement continued.