Mfg propels IIP up 29.3% in May

Industrial production surged 29.3 per cent in May, mainly due to low-base effect and good performance by manufacturing, mining and power sectors, but remained below the pre-pandemic level. The manufacturing sector -- which constitutes 77.63 per cent of the Index of Industrial Production (IIP) -- grew 34.5 per cent in May this year, as per the data released by the National Statistical Office (NSO) on Monday. The mining sector output rose 23.3 per cent in May while power generation increased 7.5 per cent during the same month. In May 2021, the IIP stood at 116.6 points compared to 90.2 point in the same month last year.

The index was at 135.4 points in May 2019 as per the NSO data. The data showed that industrial production recovered but was still below the pre-pandemic level in May 2019. The IIP had contracted 33.4 per cent in May 2020. "The IIP for May at 29.3 per cent suggests the supply chains have adopted over the last year to dampen the impact of second wave. This points to a robust Q1 considering the high frequency parameters for June are also positive," Shravan Shetty, MD Primus Partners, said.

Industrial production had plunged 18.7 per cent in March last year following the COVID-19 outbreak and remained in the negative zone till August 2020. With the resumption of economic activities, factory output rose 1 per cent in September. The IIP had grown by 4.5 per cent in October. In November 2020, the factory output fell 1.6 per cent and then entered the positive territory by growing 2.2 per cent in December 2020. The IIP had recorded a contraction of 0.6 per cent in January and 3.2 per cent in February this year. In March, it grew 24.1 per cent. For the month of April, the NSO held back the release of complete IIP data. The second wave of the pandemic started in the middle of April this year and many states imposed restrictions to curb the spread of coronavirus infections. "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," NSO said in a statement.

The government had imposed a nationwide lockdown to contain the spread of coronavirus infections on March 25, 2020. With the gradual relaxation of restrictions, there has been a relative improvement in economic activities as well as in data reporting, the Ministry of Statistics and Programme Implementation had said in a statement in November. Earlier, the ministry had also given a disclaimer that it may not be appropriate to compare the IIP in the post-pandemic months with the data for the months preceding the Covid-19 outbreak. The manufacturing sector had recorded a contraction of 37.8 per cent in May 2020. Mining sector output fell 20.4 per cent in the same month last year. The electricity generation had declined 14.9 per cent in May 2020. The output of capital goods, which is a barometer of investment, grew 85.3 per cent in May 2021 as against a contraction of 65.9 per cent in the year-ago period. Consumer durables manufacturing increased 98.2 cent in the month under review compared to a 70.3 cent decline in May 2020. Consumer non-durable goods production grew 0.8 per cent in May this year where it was a contraction of 9.7 cent in the year-ago period.