NEW DELHI: India’s industrial output growth rose to a five-month high of 5.1 per cent in May, from 4.9 per cent in April, driven by strong growth in the electricity and gas supply sector, according to data released by the National Statistics Office (NSO) on Monday.
The latest Index of Industrial Production (IIP) data also marked a major methodological revision, with the Ministry of Statistics and Programme Implementation (Mospi) replacing the Wholesale Price Index (WPI) with the Output Producer Price Index (Output PPI) as the deflator for the new 2022-23 base-year series. The change affects 234 of the 463 item groups in the IIP basket.
“Output PPI provides a more granular price structure than the WPI. For value-based items, use of Output PPI will improve the estimation of real output,” the ministry said.
The headline IIP stood at 122.7 in May, up from 116.7 a year earlier. At the sectoral level, three of the four broad sectors recorded positive growth.
Electricity and gas supply grew 9.9 per cent, up from 4.6 per cent in April. Within the sector, electricity generation from renewable sources surged 18 per cent, while non-renewable generation increased 8.8 per cent and the electricity sub-component expanded 11 per cent.
Madan Sabnavis, chief economist at Bank of Baroda, attributed the sector’s performance to two factors. “First, the heat wave led to higher demand. Second, on the supply side, the focus on renewables helped growth of 17 per cent, though admittedly there were positive base effects too,” he said.
Manufacturing growth moderated to 5.5 per cent in May from 6.1 per cent in April, while water supply, sewerage and waste management slowed to 5.5 per cent from 6.6 per cent. Manufacturing lost some momentum as industrial production in segments such as coke and petroleum was affected by the West Asia conflict, said Dipti Deshpande, principal economist at Crisil.
Mining and quarrying contracted 1.6 per cent in May, although the decline eased from 3.8 per cent in April. The sector was dragged down by fuel minerals (-6.4 per cent) and non-metallic minerals (-6.1 per cent), partly offset by 18.3 per cent growth in metallic minerals.
Under the use-based classification, four of the six segments recorded stronger growth than in April. Capital goods led with 12.9 per cent growth, up from 12 per cent. Consumer durables accelerated to 7.2 per cent from 5.6 per cent, while consumer non-durables rose sharply to 3.6 per cent from 0.2 per cent.
Primary goods growth improved to 2.6 per cent from 0.8 per cent. Infrastructure and construction goods grew 5.9 per cent, largely unchanged from 6 per cent in April. Intermediate goods, however, slowed to 5.8 per cent from 10.3 per cent.
Within manufacturing, 16 of the 23 industry groups posted growth during the month.
Deshpande expects industrial production to soften in the coming months, owing to higher imported input costs, elevated war-risk premiums linked to the West Asia conflict, and a sub-optimal monsoon. India Ratings & Research expects IIP growth to rise to 5.7 per cent in June, supported by favourable base effects and softer crude oil prices.
“Durability of recovery in consumption needs monitoring amid ongoing geopolitical volatility, inflationary pressures, and slow progress of the monsoon,” said Rajani Sinha, chief economist at CareEdge Ratings.
Source: Business Standard / Millennium Post
