What is index of industrial production data (IIP)?
IIP measures the industrial production on a monthly basis, highlighting state of 3 growth driving verticals. It is a key indicator of the manufacturing sector of the economy.
Its Economy based are as follows:
Its Use based are as follows:
What does IIP Index data mean for Financial Markets?
It serves as an indicator of corporate earnings, influencing equity & debt investors alike.
It is also a good parameter to understand the industrial activity in the country.
IIP Reading – May 2021
What is the latest reading?
IIP expands by 134.4% in Apr’21 vs 22.4% in Mar’21 and contraction of 57.3% in Apr’20.
Investor Takeaway
IIP grew on account of low base effect, leading to it recording its highest figures since the imposition of lockdown last year. Most economists suggested looking through the exaggerated growth number, which presents a false sense of normalcy even as the rampaging second wave of the pandemic in April forced many states to impose lockdowns, hurting industrial activity.
Element Trajectory
India’s road to economic recovery is laden with more bumps than previously expected as it consolidates with diverse undercurrents across different segments. The bouts of recovery are met with doubts of the unforeseen as Asia’s third largest economy faces uncertainty amidst a second wave of coronavirus. Vaccination diplomacy is key in printing problems and solutions to India Inc’s health & wealth.
The jumping of eight core sectors by 56.1% (due to low base effect) further lop-sides IIP growth as it accounts for 40.27% of the IIP index. The first half of this financial year is expected to carry similar patterns.
IIP numbers highlight the nascent and fragile stage of recovery that the Indian economy was in. We continue to keep an eye on efficient implementation of public policies which can be expected to bolster the economy at large. Resurgence of health risks in fragmented pockets of the nation, disrupted supply-side economics and overtly cautious retail consumption continue to be prominent risks to India’s full-blown economic recovery.
Click Here to read MoSPI’s original press release on ‘Quick estimates of index of industrial production and use – based index for the month of April, 2021’
