The index of industrial production (IIP) rose 1.9 per cent in March from a year ago. The IIP had grown 24.2 per cent in March 2021 and in February 1.5 per cent.
Manufacturing sector output grew 0.9 per cent in March, slightly up from an increase of 0.5 per cent in February.
While electricity production grew at a faster rate of 6.1 per cent, growth in mining output declined to 4 per cent from 4.5 per cent in February.
The production of capital goods was up a mere 0.7 percent year-on-year in March, down from an annual growth of 2 per cent in February. Consumer durables contracted 3.2 per cent from 8.7 per cent contraction a month earlier.
Madan Sabnavis, chief economist, Bank of Baroda, said: “The disappointment has been with capital goods. Clearly the investment cycle has not yet taken off and will be deferred again due to the war situation and uncertainty.”
“The pattern of growth across user based classification suggest that weak consumption demand is likely to witnessed more headwinds in the coming months from high inflation and reversal of interest rate cycle, but the demand for infrastructure goods may continue due to the sustained government capex spending,” Sunil Kumar Sinha, Principal Economist, India Ratings and Research, said
Sinha said “the consumption demand in view of high inflation/rising interest rate will remain a major risk to the economic recovery. Also, the continued weakness in capital goods does not augur well for the recovery. The hope that private corporate investment may finally pick up in FY23 may get delayed in view of the global uncertainty caused by the Russia Ukraine conflict and its spill over effect on the domestic economy.”
During 2021-22, the IIP grew 11.3 per cent as against an 8.4 per cent contraction in 2020-21. Industrial production has been hit due to the coronavirus pandemic since March 2020, when it had contracted 18.7 per cent. It shrank 57.3 per cent in April 2020 due to a decline in economic activities in the wake of the lockdown imposed to curb the spread of coronavirus infections.
