Manufacturing and mining pulled down industrial output growth to 3.1 per cent in May, compared to 4.3 per cent in April. Experts partially attributed this to cut in private spending during elections. However, if one assesses growth in the Index of Industrial Production (IIP) in a longer series, the May numbers are not too disappointing. Except April, growth has been subdued since November 2018. IIP growth from November to March ranged from (0.1) per cent to 2.6 per cent.
It was mainly electricity generation and fast moving consumer goods that proved to be the saviours for IIP numbers. While the former grew 7.4 per cent in May against 5.9 per cent in April, the latter expanded by 7.7 per cent against 5.9 per cent.
Elsewhere, there was slower growth in May compared to April. “The decline in industrial growth in May, relative to the previous month, was fairly broad-based,” Aditi Nayar, principal economist at ICRA said. Among the most prominent were capital goods and consumer durables. Capital goods rose just 0.8 per cent in May, compared to 1.2 per cent in April, which does not augur well for growth in the coming months.
Production of consumer durables fell 0.1 per cent, compared to 2.2 per cent, during the period primarily on account of subdued automobile figures. In fact, data released by the government showed that scooters and motorcycles pulled down IIP growth by 0.13 points.
Expansion in the mining sector was a mere 3.2 per cent in May, compared to 5.1 per cent in the previous month. Growth in the manufacturing sector was also subdued at 2.5 per cent in May, compared to 3.9 per cent in April. Madan Sabnavis, chief economist at CARE Ratings, said: “IIP growth remained subdued due to the election month, in which private spending was fairly constrained. Government spending was also restricted at this point of time.”