February industrial output expands to 4.5%

India’s industrial output rose to a seven-month high of 4.5% in February, primarily on account of higher production from mining sector, which expanded 10% month-on-month. Electricity generation and manufacturing that too showed a better output.

Industrial output had risen merely 0.2% in February 2019, but was at a six-month high of 2% in January this year, according to the National Statistical Office data. The output in February is the highest since July last year.

But going forward, collecting data would be difficult due to the disruptions caused by the Covid-related shut down of industries.

The cumulative growth for the period of April-February 2019-20 over the corresponding period of the previous year stood at 0.9%.

While the manufacturing sector output rose by 3.2% compared to contraction of 0.3% in the same month a year ago.

Electricity generation grew at 8.1% per cent as against a growth of 1.3% in February 2019. Mining sector output grew by 10 per cent compared to a growth of 2.2% last year.

“IIP growth of 4.5% for February is the second consecutive month of improvement. The improvement is mainly because of a sharp jump in intermediate goods, even while data for capital goods and consumer goods remains weak. There is not much to cheer from this data as IIP growth is likely to sharply fall going forward due to the impact of COVID 19 crisis. Even after the lockdown is lifted, demand for consumer discretionary items will take time to recover given the poor consumer sentiments in midst of job losses and pay cuts. Capital goods demand will also remain weak as businesses will be wary of capex in these uncertain times.” Rajani Sinha, chief economist at Knight Frank India, said.

Earlier, the output of the eight key infrastructure industries, which accounts for 40.3% of the total weight of the Index of Industrial Production, rose to an 11-month high of 5.5% in February and gave an indication of betWter industry output numbers.