IIP plunges, may impact economic growth

ndustrial growth plunged to 3.8 per cent in May, as compared to 10.6 per cent a year-ago, due to poor showing of manufacturing and electricity sector.

Industrial output, as measured by Index of Industrial Production (IIP), grew by just 5 per cent in the first two months of this fiscal, against 10.9 per cent during the same period last year.

Rising interest cost led to drastic deceleration in manufacturing growth to 3.9 per cent in May, compared to 11.3 per cent in a year-ago period. Manufacturing has a weight of over 79 per cent in IIP.

However, the positive point is consumer durables growth rose to 4.4 per cent, against negative 0.7 per cent. Electricity generation also grew by two per cent from 9.4 per cent in May last year.

Only mining output grew by 5.2 per cent, against 3.8 per cent.

The deceleration in industrial output does not augur well for overall economic growth in the first two months.