according to official data growth in industrial activity picked up to a five-month high of 7% in June, driven by an across-the-board acceleration in growth rates including in sectors such as manufacturing, electricity, infrastructure, and capital and consumer goods.
The Index of Industrial Production (IIP) registered a growth rate of 7% in June, rising from 3.93% in May. Within this, the manufacturing sector grew 6.9% in June, an increase from 3.66% in May.
“There is a pickup in investment demand overall,” D.K. Srivastava, chief policy advisor at EY India said. “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 pickup in other indicators as well, such as credit data and exports.”
The primary goods segment within the IIP registered a growth rate of 9.28% in June, up from 5.74% in May. Capital goods witnessed a similar acceleration in growth rates, coming in at 9.62% in June up from 6.92% in the previous month. The infrastructure sector showed strong growth of 8.53% in June, up from 7.42% in May.
“The strong recovery in manufacturing and consumer durables is particularly encouraging as is the continued strength in infrastructure and construction sector,” B. Prasanna, group executive and head, global markets group, ICICI Bank, said in a note.
“This is in tandem with credit growth in the construction sector at around 8% during the last 12 months.”
“However, we are slightly concerned with 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. Consumer goods saw growth accelerating to 5.92% in June from 1.57% in May.
Within this, consumer durables witnessed a strong surge, registering a growth rate of 13.1% in June, up from 6.39% in May.