IIP for Jun-18 at five-month high

• HDFC securities
• 10 Sep 2018
• Knowledge Centre

Growth in the Index of Industrial Production (IIP) rose to a five-month high of 7% in June 2018. This was up from 3.93% in May 2018. The surge was largely driven by an increase in growth in sectors like manufacturing, electricity, infrastructure, and capital and consumer goods, according to official data.

 

Speaking about the IIP number, Mr. D.K. Srivastava, Chief Policy Advisor of EY India said, “There is a pick-up in investment demand overall. This is partly driven by an increase in Government expenditure. The stimulus by the Government on the current and capital sides and a pickup in private investment have led to industrial growth. This is shown by a pick-up in other indicators as well, such as credit data and exports.”

 

According to a publication, the primary goods segment within the IIP number registered a growth rate of 9.28% in June 2018, up from 5.74% in May 2018. The infrastructure sector reflected strong growth at 8.53% in June 2018, up from 7.42% in May 2018.

 

Some sectors

 

Mr. B. Prasanna, Group Executive, and Head of Global Markets Group, ICICI Bank, has been quoted in the publication as saying, “The strong recovery in manufacturing and consumer durables is particularly encouraging, as is the continued strength in the infrastructure and construction sectors. This is in tandem with credit growth in the construction sector at ~8% during the last 12 months.”

 

Consumer goods witnessed growth increasing to 5.92% in June 2018 from 1.57% in May 2018. “However, we are slightly concerned about the weakness in consumer non-durables, though this could reverse on the back of normal monsoons and Government support aiding rural income as we go ahead,” Mr. Prasanna added.

 

In a tweet, Economic Affairs Secretary Mr.Subhash Chandra Garg said, “Excellent numbers of IIP growth for June 2018. IIP rises by 7%. Capital goods growth at 9.6%. First quarter IIP growth stands at 5.2%, with manufacturing also recording the same growth. 19 out of 23 industry groups recorded positive growth, with computer and electronics growth at 44%.