India's industrial growth, as per the Index of Industrial Production (IIP), surged to 19.6 percent in May from 7.1 percent in April, data released on July 12 by the Ministry of Statistics and Programme Implementation showed.
At 19.6 percent, the May industrial growth rate is the highest in one year, although it has been aided by a favourable base effect.
IIP growth in May 2021 was 27.6 percent.
Economists expected industrial growth to pick up sharply from April's 7.1 percent because of a low base. In the year-ago period, the IIP was posting sharp sequential falls – from 145.6 in March 2021 to 115.1 in May 2021 – as the country was engulfed by the second wave of the coronavirus pandemic, leading to the re-imposition of restrictions on movement and activity in several regions.
The statistics ministry said the growth rates over corresponding period of previous year are to be interpreted "considering the unusual circumstances on account of COVID 19 pandemic since March 2020".
| MAY 2022 | APRIL 2022 | MAY 2021 | |
| IIP growth | 19.6% | 7.1% | 27.6% |
| Mining | 10.9% | 7.8% | 23.6% |
| Manufacturing | 20.6% | 6.3% | 32.1% |
| Electricity | 23.5% | 11.8% | 7.5% |
| USE-BASED CLASSIFICATION | |||
| Primary goods | 17.7% | 10.1% | 15.8% |
| Capital goods | 54% | 14.7% | 74.9% |
| Intermediate goods | 17.9% | 7.6% | 54.2% |
| Infrastructure goods | 18.2% | 3.8% | 46.5% |
| Consumer durables | 58.5% | 8.5% | 80.4% |
| Consumer non-durables | 0.9% | 0.3% | 0.2% |
The low base meant May saw all three sectors - mining, manufacturing, and electricity - showing a sharp improvement in output growth. The same was true for all types of goods under the use-based classification, except consumer non-durables.
Production of consumer non-durables rose 0.9 percent in May against 0.3 percent growth in April.
Barclays attributed the spike in May IIP to the low base effect as well as resilient activity.
"The improvement in industrial growth has been supported by resilient demand, with the index now 1.7 percent above its pre-pandemic levels in May 2019. So far, robust growth in exports, along with greater mining and fertilizer production is helping to boost output, while manufacturing also faced easier supply headwinds," Rahul Bajoria, Barclays India chief economist, said in a note. "Still, we see scope for moderation going forward, as a combination of tempered demand and rising costs are likely to dampen activity levels."
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