India’s industrial production up a modest 1.7% in February

The modest increase in industrial production was on account of improved performance by the mining and power generation sectors, data released by the ministry of statistics and programme implementation showed.

The growth in IIP was 1.5 per cent in January 2022. It had contracted by 3.2 per cent in February 2021.

The growth in the mining sector was 4.5 per cent against a contraction of 4.4 per cent in February 2021.

In February this year, the manufacturing sector expanded 0.8 per cent whereas it had witnessed a contraction of 3.4 per cent in the year-ago period.

However, growth in power generation accelerated to 4.5 per cent against a flat growth of 0.1 per cent in February 2021.

In the April-February period of the last fiscal, the IIP growth stood at 12.5 per cent against a contraction of 11.1 per cent in the corresponding period of 2020-21.

For April 2021-February 2022, industrial output saw a growth of 12.5 per cent as against a contraction of 11.1 per cent in the corresponding period of FY21.

Industrial growth was expected to rise in February, with data released late in March showing that the output of India's eight core sectors increased by 5.8 per cent year-on-year in February, up from 4 per cent the previous month.

With the eight core industries accounting for 40.3 per cent of the total weight of IIP, industrial growth tends to rise when the performance of these sectors improves.

Though industrial output increased at a greater rate in February than in January, the rate of expansion remains subdued. The manufacturing sector, which makes up over three-fourths of the IIP, grew by a mere 0.8 per cent in February, down from 1.3 per cent in the first month of 2022.

However, mining and electricity saw an appreciable improvement. While mining output rose 4.5 per cent year-on-year in February, up from 2.8 per cent in January, electricity generation was up 4.5 per cent. In January, growth in electricity production was up a mere 0.9 per cent.

In February, the output of primary goods, intermediate goods, and infrastructure goods grew at a faster clip than in January.

Growth in capital goods output, however, slowed to 1.1 per cent on a year-on-year basis from 1.4 per cent in January, while consumer durables and non-durables witnessed a contraction compared to the same month last year.

A capacity utilisation rate of above 75 is regarded as the level that must be crossed for companies to start investing in greater capacity. However, production of capital goods has risen by less than 1.5 per cent in each of the first two months of 2022.

Capital goods production contracted by 2.7 per cent on average in October-December 2021.