IGI Logo

Below the Quote on IIP by Rahul Agrawal, Principal Economist, ICRA Ltd

The year-on-year (YoY) growth in the IIP printed at a stronger-than-expected 8.0% in August 2026, materially exceeding ICRA’s estimate of ~6.0% for the month. The acceleration from the upward revised print of 7.4% for July 2026 was led by entirely manufacturing and electricity segments, even as mining and other utilities saw a deterioration in their performance between these months.

Growth in manufacturing output surged to 9.0% in August 2026 from 8.2% in July 2026, aided by a favourable base on account of inventory recalibration in year ago month ahead of the implementation of the GST rate cuts. As many as 14 of the 23 manufacturing sub-sectors witnessed an uptick in their growth rates between these months. Notably, 10 sub-sectors reported a double-digit expansion in August 2026, including the engineering-related segments such as fabricated metal products, computer, electronic & optical products, electrical equipment, machinery, motor vehicles, trailers & semi-trailers, etc.

Mining output contracted by a sharp 5.6% in August 2026 – the steepest decline in the new IIP series.  In contrast, electricity generation expanded by a 27-month high 13.3% in August 2026, aided by healthy demand owing to sub-normal rainfall.

Interestingly, only two of the six use-based segments, namely consumer non-durables and intermediate goods, witnessed an uptick in their YoY performance in August 2026 compared to July 2026. However, three of the six segments witnessed a double-digit growth in the month.

IIP growth has averaged at 7.7% in July-August 2026, up from 6.2% in Q1 FY2027, suggesting that industrial volume growth has remained strong in these months, which should partly offset the likely impact of margin pressure stemming from the renewed surge in global commodity prices, on the Q2 GDP growth.

Above views are of the author and not of the website kindly read disclaimer