The situation was different for two other major industries of the IIP, mining and electricity. Despite a 3.3% year-over-year decline in July, mining production increased by about 1% compared to 2019-2020. In July, electricity generation increased 2.3% year-on-year, while it increased more than 11% from 2019 to 2020.
In the first four months of fiscal year 23, manufacturing increased 10% year over year, but only 2.6% over the same period in 2019-20.
In a sense, manufacturing data paints a tale that can be compared to what the GDP data revealed. In contrast to the 12.7% gross value added growth in the first quarter of the current fiscal year, the manufacturing total value added increased by only 4.8%.
It should be noted that manufacturing in IIP refers to physical volume, while it refers to value added in gross domestic product or GVA. In addition, IIP is used to measure manufacturing in the total value added of the non-institutional and unorganized sector; The exchanges are used for the rest.
ICRA Chief Economist Aditi Nayar said IIP’s July manufacturing edition is decidedly tepid. “However, high-frequency indicators such as car takeouts and electronic GST invoices point to a healthier August.”
According to the companies’ monthly sales data, transmissions at India’s seven largest auto companies increased 30.2% year-on-year to 305,744 units from 234,743 units. With the exception of May, when the rally came from a lower base than last year, this was the largest annual gain recorded in the current year.
Compared to 75.6 million in July, 78.2 million electronic invoices were issued in August.
Nayar noted that as demand for services moves, industrial output growth is expected to be relatively moderate in the short term.
According to Madan Sabnavis, chief economist at Bank of Baroda, the IIP and GDP figures show that growth is not evenly distributed. He continued, “Right now, the infrastructure participants are doing well, but the consumer piece is still missing.
While non-durable consumer goods declined 2% and consumer durables expanded 2.4% in July from a year earlier, infrastructure/construction output rose 3.9%. Infrastructure saw an increase of 7.1%, but consumer durables and non-durables saw a decrease of 2.4% and 6.7%, respectively, in July compared to 2019-2020.
He said all sectors need to grow together to achieve sustainable growth. “This is when we will see exponential growth in IIP,” Sabnavis added.