India's IIP growth in Feb-22 continued to be modest at 1.69% YoY - Acuité Ratings

Mr. Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

"India's IIP growth in Feb-22, while the highest in the last four months, continued to be modest at 1.69% YoY. The modest print in IIP has been clearly due to the lack of a sustained revival in the manufacturing sector since Nov-21 which reflects the persistent weakness in overall domestic demand and supply shortages in sectors such as automobiles. The activity in both the mining and the electricity sector have been relatively better with 4.5% output growth in both that highlights a healthy recovery after coal shortages seen in Oct-Nov'21.

On a cumulative basis, the industrial output in the first eleven months of the current fiscal (Apr'21-Feb'22) is around 1% and 12.4% higher than in the comparable period of pre-pandemic FY20 and FY21 respectively which highlights a moderate industrial recovery despite bouts of the Covid pandemic in the previous fiscal.

On the user-based side, weakness is visible in both the consumer durable and non-durable sectors on a YoY basis contracting 6.6% in Feb-22, highlighting the demand weakness primarily from the rural sector. Going forward, the growth in IIP will be driven by higher investments in the infrastructure sector and an expected revival in rural consumption demand although it is set to be partly offset by sharply increased inflationary pressures aggravated by the geo-political developments."

Source : Equity Bulls

Keywords

IIP India February2022 AcuiteRatings