NEW DELHI: A low base helped skyrocket India’s industrial activity with output levels growing 134.4 per cent in April (highest in the 2011-12 base period series) when compared to a near-washout April 2020.
Most economists, however, have warned that the high numbers must be interpreted with caution as it comes on the back of ‘nil production’ last year.
The real growth story, they said, remains humble as the economy is still struggling to match pre Covid-19 period. To be sure, the April figures were up by just 0.08 per cent from the pre-pandemic levels of April 2019.
On a sequential basis, IIP contracted 12 per cent in April, reflecting a hit on the manufacturing sector owing to the lockdowns imposed in most states to curb the spread of the second wave of Covid-19 cases.
The manufacturing sector, hit hardest by the national lockdown over April 2020, recorded a 197.1 per cent uptick this April, though it was still 0.9 per cent lower than April 2019 levels.
Electricity output rose 38.5 per cent in April 2021 from a year ago, and was 6.81 per cent higher than the pre-Covid-19 levels of April 2019. Similarly, Mining output grew 37 per cent year-on-year in April, but was only 0.2 per cent higher than the same month in 2019.
“Last year, output had come to a standstill in most sectors. Therefore, the growth numbers for April which are exceptionally high need to be ignored. A similar situation would arise in May too and it would be only from June that there could be reasonable numbers forthcoming,” said Madan Sabnavis, chief economist at CARE Ratings.
Even the National Statistical Office (NSO) stressed that the numbers are not strictly comparable with April 2020 when the country was in the midst of a national lockdown.
Aditi Nayar, chief economist, ICRA said what is concerning is that capital goods and consumer durables output trailed the April 2019 levels by 14.3 per cent and 11.6 per cent, respectively, which suggests weakening consumption. The level of industrial output of April 2021 does not provide an encouraging picture overall.
134.44% IIP growth Apr’21 vs Apr’20
0.08% IIP growth Apr’21 vs Apr’19
(-) 12% IIP growth Apr’21 vs Mar’21