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
“Growth in industrial output accelerated to 8% y-o-y in August from 7.4% in the previous month, surpassing market expectations and indicating continued resilience in economic activity. This strong performance is in line with the momentum seen across other economic indicators, such as GDP growth, bank credit offtake, exports, and automobile sales, highlighting that the economy has held up well despite the persistent global uncertainties and elevated energy prices. The continued encouraging performance in consumer durable goods is positive for the consumption scenario, however, the feeble performance of consumer non-durables remains concerning. Continued strength in infrastructure/construction output, supported by robust public capex, has also provided an important underpinning to the industrial growth.
Looking ahead, industrial activity will need to navigate an uncertain external environment marked by persistent geopolitical tensions, volatile energy prices, supply-chain disruptions, and elevated input prices. On the domestic front, rising inflationary pressures and its impact on real wages, coupled with weather-related uncertainties remain the key risks. However, given the strong momentum visible across the other economic indicators, industrial production is expected to remain resilient.”
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