NewsPatrolling.com :“The Index of Industrial Production (IIP) for the month of January 2018 came in at 7.5% while the cumulative IIP for the 10 months period (Apr-Jan) came in at 4.1%. Among the components of IIP, mining disappointed at just 0.1% but manufacturing and electricity flattered at 8.7% and 7.6% respectively. Even if you factor in the base effect due to the impact of demonetization last year, the pickup in manufacturing is surely laudable, more so, because manufacturing accounts for over 70% of the IIP composition.
In terms of specific industry groups, 16 out of the 23 industry group classifications showed positive growth in IIP. What is gratifying among the major growth sectors is that they consist of segment like transport equipment, motor vehicles, trailers and semi-trailers which are normally lead indicators of a larger recovery in macroeconomic growth and capital spending. The other key takeaway was the use-based classification wherein capital goods showed a healthy growth rate of 14.6% while both the consumer durable and non-durable segment grew by over 9%. The fall in IIP was more due to sectors like tobacco due to demand driven factors and gems & jewellery for obvious reasons.
The sharp improvement in IIP is a positive trigger for the Q4 GDP which will be announced on the last day of May and a good performance in May will take the overall GDP growth to above the 6.7%. The onus is now on the government to ensure that bank credit is easily available at competitive rates so that these advantages of a turnaround can be actually sustained and also monetized.”
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