Factory output grows 11.5% as base effect ebbs
NEW DELHI: India’s industrial output registered a growth of 11.5% in July, as the effect of low base faded. However, experts claim that most of the sectors are bouncing back to pre-Covid levels. The index of industrial production grew at 13.5% in June. IIP had contracted by 10.6% in July of the last fiscal year.
Experts say that all use-based segments, except consumer durables, have recovered to pre-Covid level. Also, only three industries showed contraction in output in July, which is half of six such industries in the previous month.
“The healthy sequential up move benefited from easing restrictions and rising mobility, but was dwarfed by the continued normalisation of the base,” said Aditi Nayar, chief economist at ICRA. Rahul Bajoria, chief India economist at Barclays, said the headline IIP was now short of July 2019 levels by a mere 0.3%. “We expect sequential growth recovery to persist broadly over the coming months,” he said.
According to the government data, manufacturing growth declined to 10.5% in July compared to 12.8% in June. Similarly, mining expansion fell to 19.5% from 23.1%. On the other hand, electricity growth rose to 11.1% against 8.2%. Growth of consumer durables fell to 20.2% in July from 27.9% in the previous month, while consumer non-durables continued to contract.
But the pace of contraction was 1.8%, better than 4.3% in the previous month. Cumulatively IIP growth stood at 34.1% in the first four months against the fall of 29.3% in the corresponding period of the last fiscal. “...from September, the base effect will get diluted sharply,” said CARE Ratings Chief Economist Madan Sabnavis.
34.1% Growth in first four months
29.3% Fall registered in year-ago period
10.5% Manufacturing growth fall in July