Perspective on the IIP Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
Below the Perspective on the IIP Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
“Industrial output in India increased to 5.1% in May, up from 4.9% in the preceding month, supported by improved performance in electricity & gas supply. The manufacturing sector, along with water, sewerage, and waste management, continued to exhibit healthy growth despite moderation. Sixteen of the 23 manufacturing sub-sectors recorded output growth in April, with notable gains in textiles, paper products, fabricated metals, electrical equipment, machinery, and automobiles. On the used based side, the uptick in consumer goods production – both durable and non-durable goods - is a positive signal. However, its durability of recovery in the consumption needs monitoring amid ongoing geopolitical volatility, inflationary pressures, and slow progress of the monsoon. Global economic and geopolitical conditions remain volatile despite the recent ceasefire in the West Asia crisis. India’s industrial sector, particularly export-oriented industries could face headwinds from the uncertain external environment. However, the recent sharp correction in global energy prices provides some respite. On the domestic front, weather-related risks are increasing due to the slow progress of the monsoon amid El Niño conditions. A weaker monsoon could pose a threat to the consumption and inflation outlook. Overall, India’s industrial activity will need to navigate an increasingly uncertain external environment alongside emerging domestic challenges”.
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