IIP growth up to 1.7% in February

12 Apr 2022 , 08:07 PM

According to the Ministry of Statistics and Programme Implementation showed on Tuesday that IIP grew up to 1.7 per cent in February from 1.5 per cent in January.

Mining and electricity saw an appreciable improvement, while mining output rose 4.5 per cent yoy in February, up from 2.8 per cent in January, that of electricity was also up by 4.5 per cent. In January, electricity production was up a mere 0.9 percent.
Aditi Nayar, Chief Economist, ICRA said “While the easing of restrictions after the abatement of the third wave mildly propped up the IIP growth in February 2022, it trailed our expectations as well as the core sector’s performance, pointing to a disappointing showing of the non-core components, especially consumer goods. The mild rise in the IIP growth in February 2022 was led by mining and electricity, while the performance of manufacturing slipped to a marginal 0.8% YoY rise.”

“In terms of the use-based classification, the performance was decidedly mixed, with a contraction in consumer goods being offset by a sharp 9.4% expansion in infra/construction goods. While the 8.2% contraction in consumer durables can be attributed partly to a high base and the restrictions in the early part of the month, consumer non-durables also displayed a discouraging 5.5% degrowth in February 2022,” Aditi Nayar added.

While the capacity utilisation for Q2 FY2022 surprised on the upside, and there has been an improvement in new project announcements, the growth in capital  goods output remained sub 1.5% in Jan-Feb 2022, after the contraction seen in Q3 FY2022.  

A majority of high frequency indicators witnessed an improvement in their g   rowth performance in March 2022, aside from a contraction in the output of CIL (after a gap of 11 months), and a sharp moderation in the YoY growth of non-oil merchandise exports, based on which we expect the IIP growth to accelerate to 3-5% in the just concluded month. 
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Going forward, the surge in global commodity prices and the disruptions caused by the Russia-Ukraine conflict and the supply chain implications of the continued lockdowns in China since March 2022 following the outbreak of a fresh Covid-19 wave in the country do not augur well for output of those sectors, including automobiles, that are dependent on key raw materials provided by Russia, Ukraine or China, in the absence of any other alternatives.”