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Below the Quote on IIP by Aditi Nayar, Chief Economist, ICRA Ltd

"The year-on-year (YoY) growth in the IIP surged to a 23-month high of 7.3% in June 2026 from 5.0% in May 2026, amid a broad-based acceleration in growth across the four sectors between these months, albeit partly benefitting from a modest base. Manufacturing output growth, in particular, witnessed a sharp uptick in June 2026, contributing as much as 199 bps of the 235 bps uptick in the IIP growth relative to May 2026.

Four of the six use-based segments, barring capital goods and consumer durables, witnessed an improvement in their growth performance in June 2026 relative to May 2026. While capital goods expanded by double digits for the third consecutive month in June 2026, infra/construction goods output rose by a healthy 7.5% in the month; this suggests investment activity remained robust in the month, benefitting from the easing of tensions in West Asia as well as the large rainfall deficit seen in June that offered extended period for activity. Besides, consumer non-durables output rose by 4.9% in June 2026, the highest pace in six months, while durables output grew by a strong 7.7% in the month.

IIP growth improved to a healthy 5.8% in Q1 FY2027 from 3.8% in Q4 FY2026, aided by a robust uptick in manufacturing output as well as electricity generation, with the latter aided by elevated temperatures as well as a delayed onset of the monsoon. While higher volume growth augurs well, margin compression owing to higher input costs is expected to constrain industrial GVA growth in the quarter."

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