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 29.3% in May’21 vs 134.4% in Apr’21 and contraction of 33.3% in May’20.
Investor Takeaway
IIP grew on account of low base effect, with May numbers being lower by 13.9% than the pre pandemic levels. There has been a sequential moderation in due course of localized lockdowns reflecting hints that a sustained industrial recovery is still far reachable.
Element Trajectory
India’s road to economic recovery is becoming more clearer but the supply side factors arising due to rising cases and localized lockdowns are still a key concern for industrial activity to bounce back. While the second wave waning off and phased unlocks underway the bouts of recovery are met with doubts of the unforeseen as India faces uncertainty amidst a rising cases of coronavirus. Vaccination diplomacy is key in printing problems and solutions to India Inc’s health & wealth.
Since the onset of fiscal year 2021-2022 manufacturing activity witnessed one of the highest growth (+88.8%) for the period Apr’21 to May’21. Consumer Durables and Capital Goods were the worst effected sectors in May.
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 May, 2021’
