Apr 3, 2023 | 2022(May), Blog
Industrial output as measured by the index of industrial production in May’22 grew by a strong 19.6% from a year earlier, the fastest rate of growth in 11 months. This high growth rate is mainly due to statistical factors i.e., the low index value in June’21 which was a period of the second wave of the pandemic and associated restrictions which impacted industrial output. Industrial production nevertheless has been witnessing an improvement. All segments of the IIP registered growth from a year earlier.
Output in May’22 was 1.7% higher than the pre-pandemic period of May’19. On a sequential basis also, output was up 2.3%. All segments of the index of industrial production (IIP) witnessed strong growth from a year ago except consumer non-durables. However, manufacturing output is yet to attain the pre-pandemic production levels i.e., of May’19. Similarly, capital goods and consumer goods production remains lower than that period. This is reflective of the weakness in investment demand and consumer demand.
Despite the favorable growth momentum of the last two-months, industrial output in the coming months could be weighed down by higher input costs and rise in cost of funds. Also, it need be seen if consumption and investment demand improves in a durable manner and herein there lies significant uncertainty.