India’s Industrial Production Shows Resilience, Registers Three-Month High Growth in May

India’s index of industrial production (IIP) displayed robust growth in May, reaching a three-month high of 5.2 percent year-on-year, despite facing challenges such as unseasonal rains and an adverse base. This positive trend, as reported by rating agency ICRA, indicates the resilience of the country’s industrial sector amid unfavorable conditions.

The May figures, revised from 4.5 percent in April, surpassed expectations and align closely with ICRA’s estimated growth rate for that month. The improvement was observed across all sub-sectors, including manufacturing, which saw a rise from 5.2 percent in April to 5.7 percent in May.

ICRA’s analysis highlighted that fifteen sub-sectors, including textiles, demonstrated an improvement in their year-on-year performance in May compared to April. This signals a broad-based recovery within the industrial landscape, defying the challenges posed by unseasonal rains and a relatively weak base from the previous year.

According to ICRA’s note, industrial output recorded a notable increase of 3.2 percent in May this year. This positive growth reinforces the belief that the Indian industrial sector is gaining momentum and gradually recovering from the adverse impacts of the pandemic and other external factors.

However, despite the strong performance in May, high-frequency indicators for June exhibited a slight weakening compared to the previous month. As a result, ICRA predicts that the year-on-year IIP growth for June is likely to be around 3-4 percent. Looking ahead, ICRA expects the industrial production growth to average at 4-4.5 percent in the first quarter (Q1) of the fiscal year 2023-24, similar to the growth rate observed in the previous quarter (Q4) of the last fiscal year.

The consistent growth in India’s industrial production, particularly in key sectors like textiles, indicates a positive trajectory for the country’s economy. Despite challenges posed by external factors and changing market conditions, the industrial sector continues to demonstrate resilience, contributing to the overall economic recovery.


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