India’s August industrial production rises to four-month high, output higher by 11.9% YoY

Low base effect, along with a rise in demand, pushed India’s industrial output higher by 11.9 per cent in August, on a year-on-year basis. The Index of Industrial Production (IIP) for August rose by 11.9 per cent from a decline of 7.1 per cent reported for the like month a year ago.

Last year, while the country observed a full-fledged lockdown, the same was partially imposed across different regions of the country. However, the production rate was flat on a sequential basis.

“For the month of August 2021, the ‘Quick Estimates of Index of Industrial Production’ (IIP) with base 2011-12 stands at 131.1,” the Ministry of Statistics and Programme Implementation said. “The ‘Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of August 2021 stand at 103.8, 130.2 and 188.7, respectively.”

Among the major use-based segments, the July data, on a YoY basis, showed that manufacturing of primary goods grew by 17 per cent from (-) 10.7 per cent, while capital goods production rose 19.9 per cent from (-) 14.4 per cent, and intermediate goods increased by 10.3 per cent from (-) 4.8 per cent.

Similarly, the production of infrastructure or construction goods rose by 11.1 per cent and consumer durables’ production grew by 8 per cent from (-) 10.2 per cent.

The sub-segment of consumer non-durables showed a growth of 5.2 per cent from a fall of (-) 3 per cent.

Acuite Ratings & Research Chief Analytical Officer Suman Chowdhury said: “India’s Industrial Production expanded by 11.9 per cent YoY in August 2021 with a gradual revival in industrial activity. However, the momentum of such revival has clearly dropped as evident from the slight sequential contraction in the index vis-a-vis the strong uptick seen in the months of June-July after the peak of the second Covid wave.”

“On the sectoral side, only electricity generation continued to show a sequential growth which also reflects an increased demand for power, leading to higher demand for coal as against relatively lesser supplies during the monsoon months.”

Emkay Global Financial Services Lead Economist Madhavi Arora said: “IIP growth has remained steady in August. We expect demand for industrial output to improve on net ahead.” “However, supply constraints, both global n domestic and energy crisis could dent the production temporarily.”

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