Industrial production grew by 22.4 per cent in March 2021 from a year earlier, government data showed on Friday. The industrial production growth entered the positive territory after a gap of two months due to a low base effect and strong growth in the manufacturing, mining, and electricity sectors. The industrial production, or the factory output, gauged by the Index of Industrial Production (IIP), declined 3.6 per cent in February. Separate government data showed that the retail inflation eased to 4.29 per cent in April 2021, due to a decline in food prices. (Also Read: Retail Inflation Eases To 4.29% In April On Decline In Food Prices )
According to the industrial production data released by the Ministry of Statistics and Programme Implementation, the indices for the mining, manufacturing, and electricity sectors for March 2021 stand at 139.0, 140.4, and 180.0 respectively. The manufacturing sector, which comprises 77.63 per cent of the index of industrial production, grew 25.8 per cent in March 2021. The mining sector output also grew 6.1 per cent, while the power generation increased by 22.5 per cent.
The output of capital goods – a barometer of investment, grew 41.9 per cent in March 2021, compared to a contraction of 38.8 per cent in the year-ago period. The production of consumer durables grew 54.9 per cent in March 2021, compared to a 36.8 per cent decline in the year-ago period.
Moreover, the country’s output of the eight core sectors — also known as the infrastructural output, grew 6.8 per cent in March 2021, according to government data released on April 30. The infrastructure output, comprising the eight core sectors including coal, crude oil, electricity, etc registered a de-growth of seven per cent during the April-March 2020-2021 period.
The eight core industries comprise 40.27 per cent of the weight of items that are included in the industrial output or the IIP. The growth in the infrastructure output was led by the cement sector, followed by the steel and electricity sectors in March 2021. (Also Read: Infrastructure Output Of Core Sectors Rises 6.8% In March 2021 )
“The IIP growth print for March 2021 has clearly benefitted from the base effect with the national lockdown having been announced in the last week of March 2020 and the consequent impact on industrial activity. The overall index, therefore shot by 22.4 per cent on a YoY basis compared to the sharply lower base in March 2020,” said Mr. Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.
”However, the sequential movement in the overall index and all its components – mining, manufacturing, and electricity has pleasantly surprised us. Even if we ignore the weaker data for Jan and Feb, the output levels in March 2021 have gone up significantly from those seen in Dec 2020,” explains Mr Suman.
”While there is a broad-based uptick in manufacturing on a YoY basis due to the base effect, there has been a heightened activity in the export-driven sectors and particularly refined petroleum products in March 2021. However, the sustainability of an uptrend in manufacturing is clearly in question due to the expected disruption caused by Covid 2.0 in April and May 2021,” added Mr Suman.