Acuité expects GDP growth for FY23 at 7.5% amidst government's strong thrust on infrastructure segment

After hitting a 10-month low in Dec-21, India's Index of Industrial production (IIP) recovered marginally expanding by 1.3% YoY in Jan-22 from an upwardly revised print of 0.7% in Dec-21 (earlier 0.4%). However, the subdued industrial activity due to the state level lockdown restrictions imposed amidst the spread of Omicron variant clearly got reflected in the sequential print. As such, the industrial output on sequential basis remained flat from an expansion of 7.8% in Dec-21.

From the industry side, contraction was recorded in the manufacturing space (-0.9% MoM in Jan-22 vs. 7.6% in Dec-21) with 15 out of 23 industries recording a sequential decline. Further, mining (3.7% MoM vs. 7.6%) and electricity output (1.9% MoM vs. 9.9%) also recorded some moderation.

The industrial and mining activities which had been gradually recovering from coal supply problems faced during Oct-Nov'21 is likely to be confronted with fresh headwinds amidst the geopolitical tensions in Russia and Ukraine. Significant surge in coal prices may reduce coal imports, thereby putting additional pressure on domestic production and increasing supply bottlenecks. This can have a cascading impact on the industries such steel, cement, aluminum etc. that are heavily reliant on coal for its production.

Link to the report

Source : Equity Bulls

Keywords

AcuiteRatings Economy IIP India