FACTORY OUTPUT RISES 7.1% TO 8-MONTH HIGH

NEW DELHI: Index of Industrial Production (IIP), a measure of factory output, grew at 7.1% on an annual basis in the month of April, according to data released by the NSO on June 10.

This is the highest IIP growth in last eight months and a significant improvement from the 2.2% number in the month of March. However, a disaggregated analysis of the numbers shows that while there is a clear economic recovery underway, it is still not broad-based.

In absolute terms, IIP for April 2022 stands at 135.1. This is higher than the pre-pandemic level of April 2019 at 126.5. IIP had crashed to just 54 in April 2020, a result of the complete lockdown which was imposed on March 25, 2022. At 126.1 in April 2021, IIP had pretty much attained its pre-pandemic value last year itself, despite the disruption caused by the second wave of the Covid-19 pandemic. So there is not much in terms of base effect in the latest annual growth reading.

However, a look at use-based classification data of the IIP shows that the pre-pandemic levels still elude consumer goods and capital goods categories of the index. Even on a year-onyear basis, consumer goods category shows the lowest growth in the April 2022 numbers.

“The paltry year on year growth in the consumer non-durables also alludes to the K shaped recovery whereby households falling in the lower end of the pyramid are finding their real income being eroded disproportionately by high inflation,” said a note by Sunil Kumar Sinha, Principal Economist, India Ratings and Research.