NEW DELHI: Industrial production grew 7.3% in June, a 22-month high, as against 2.2% a year ago on account of strong expansion in manufacturing, electricity and gas supply in the month, due to low base effect and resilient domestic demand conditions in the face of prolonged crisis in West Asia and erratic monsoon. Sequentially too, industrial production fared better in June as compared with the downwardly revised figure of 5% in May.The index of industrial production (IIP) data released by the statistics ministry Tuesday pegged the first quarter (April-June) IIP growth at 5.8% as against 3.4% a year ago.Among the sub sectors — electricity and gas supply (10.6%) recorded the highest growth during the month on account of sustained heat wave conditions. The manufacturing sector, which has a weight of 76% in the index, grew 7.8%, followed by water supply, sewerage & waste management (6.1%) and mining and quarrying (1%).
Dipti Deshpande, principal economist at Crisil said Indian firms have “adroitly sourced” materials from alternative markets and used domestic inventories to sail past the supply straitjackets of the conflict, with strong domestic demand and sustained retail credit growth also providing an offset to geopolitical uncertainties.Among the manufacturing sector, 19 out of 23 industries recorded growth in June, with electrical equipment industry having the highest growth (34%). Sectors like motor vehicles, trailers and semi-trailers (17.5%), textiles (13.7%), beverages (12.5%) and food products (10.8%) also showed robust growth.CareEdge Ratings chief economist Rajani Sinha said high input prices due to uncertain global environment will continue to pose risk for the industrial sector, along with an erratic monsoon, particularly its impact on kharif production and rural demand.India Ratings director Megha Arora expects IIP growth to moderate 5.4% in July on account of adverse base effect. Deshpande added that a slowing global growth is weakening export demand and elevated input costs and price pass throughs are expected to squeeze producer margins, temper consumption demand and moderate industrial output in coming months.
