Industrial production surged 11.5 per cent in July mainly because of a low-base effect and good performance by the manufacturing, mining and power sectors even as output remained slightly below the pre-pandemic level.

The manufacturing sector, which constitutes 77.63 per cent of the Index of Industrial Production (IIP), grew 10.5 per cent in July, according to the data released by the National Statistical Office.

Mining sector output rose 19.5 per cent in July while power generation increased 11.1 per cent.

Madan Sabnavis, chief economist, Care Ratings, said: “We may expect a high growth rate in August too as last year there was a decline in growth. However, from September onwards the base effect will get diluted sharply as growth was positive in the next two months. A critical part would be the expected revival in demand especially for consumer goods, which will make firms build up stocks from August onwards.”

Aditi Nayar, chief economist, Icra, said: “The manufacturing index in July 2021 (130.9) was nearly as high as the level in October 2020 (132.0) during last year’s festive season, which offers a glimpse into the strength of the revival after the second wave.”

The YoY contraction in consumer non-durables in July 2021 for the second month in a row struck a discordant note, although this was partly driven by an unfavourable base related to restocking after the first wave.”

The manufacturing sector had recorded a contraction of 11.4 per cent in July 2020. Mining sector output fell 12.7 per cent in the same month last year. The electricity generation had declined 2.5 per cent in July 2020.

The output of capital goods, which is a barometer of investment, grew 29.5 per cent in July 2021. It had witnessed a contraction of 22.8 per cent in the year-ago period.

Consumer durables manufacturing increased 20.2 cent in the month under review whereas it was a decline of 23.7 cent in July 2020. Consumer non-durable goods production fell 1.8 per cent in July whereas it had grown 1.8 cent in the year-ago period.

In July 2021, the IIP stood at 131.4 points compared to 117.9 points in the same month last year. The index was at 131.8 points in July 2019, as per the NSO data.

The data showed that industrial production recovered but was still slightly below the pre-pandemic level of July 2019. The IIP had contracted by 10.5 per cent in July 2020. Industrial production plunged 18.7 per cent in March last year following the COVID outbreak and remained in the negative zone till August 2020.b

With the resumption of economic activities, factory output rose 1 per cent in September 2020 and grew 4.5 per cent in October. In November 2020, the factory output fell 1.6 per cent and then entered the positive territory with a 2.2 per cent growth in December 2020.

The IIP had recorded a contraction of 0.6 per cent in January and 3.2 per cent in February this year. In March, it grew 24.2 per cent. For the month of April, the NSO held back the release of complete IIP data. In May 2021, IIP rose 28.6 per cent and in June, it grew 13.6 per cent.

The second wave of the pandemic started in the middle of April this year and many states imposed restrictions to curb the spread of coronavirus infections.

"The growth rates over corresponding period of previous year are to be interpreted considering the unusual circumstances on account of COVID-19 pandemic since March 2020," NSO said in a statement. The government had imposed a nationwide lockdown to contain the spread of coronavirus infections on March 25, 2020.