Informist, Wednesday, Aug 10, 2022
By Aditya Saroha
NEW DELHI - Industrial growth in India is expected to have slowed to 10.5% in June from 19.6% a month ago,
according to a poll of 25 economists by Informist, as a favourable base effect has started to fade away.
India was grappling with the second wave of COVID-19 in the initial months of last year, leading to lockdowns and slowing down of economic activity. This low base led to higher growth in industrial production every month since March this year, but will now see a waning effect as lockdowns were relaxed around June 2021.
Industrial production had increased 13.8% in June 2021, but the base was still low as it came after a contraction of 16.6% a year ago. Due to the lockdowns to curb the spread of the COVID-19 pandemic, economic activity was at a near standstill in June 2020.
The National Statistical Office is scheduled to release industrial production data for June at 1730 IST on Friday.
Projections by economists for industrial growth in June ranged from 6.3% to 14.1%.
High-frequency indicators, including core industries and vehicle sales, showed a mixed trend in June. Growth in eight core industries, which account for over 40% of the total weight of the Index of Industrial Production, fell to 12.7% in June from a 13-month high of 19.3% in May. On a month-on-month basis, the
overall index declined 4.1%.
Sequentially, six of the eight sub-sectors of core industries contracted in June.
Yuvika Singhal, economist at QuantEco, expects the indices of all three sub sectors of industrial production--mining, manufacturing, and electricity--to contract on a month-on-month basis.
Manufacturing PMI for June fell to a nine-month low of 53.9 from 54.6 a month ago.
However, domestic sales of two-wheelers increased for the third straight month in June. Sequentially, the sales rose 4.4% to 1.31 mln, indicating an improvement in rural demand. Passenger vehicle sales in India rose 19.1% year-on-year to 275,788 units in June because of strong growth in the utility vehicles segment.
E-way bills, a lead indicator of economic activity and domestic trade, rose 1.2% to 74.48 mln in June from 73.62 mln a month ago.
Even if the index remains unchanged from May, factory output will be 10.8% higher year-on-year due to the low base. For IIP growth to stand at 10.5%, the index will have to fall 1.5% on a month-on-month basis.
Typically, the overall index falls in June compared to May. Barring 2020 and 2021, when the economy was in a lockdown due to COVID-19, the index, on an average, has fallen 2.7% month-on-month in June in the current series that started in 2012.
The following is a summary of details and estimates of respondents for IIP growth in June:
Mean: 10.5
Median: 10.5
Mode: 12.0
Organisation | Forecast |
| QuantEco Research | 6.3% |
| Sunidhi Securities | 8.3% |
| Moody's Analytics | 8.4% |
CRISIL | 9% |
| Deutsche Bank | 9.1% |
| I-SEC PD | 9.1% |
| DBS Bank | 9.5% |
ICRA | 10.2% |
Bank of Baroda | 10.3% |
| ICICI Bank | 10.3% |
Motilal Oswal Financial Services | 10.3% |
| Emkay Financial Services | 10.5% |
| Equirus Group | 10.5% |
HDFC Bank | 10.6% |
IndusInd Bank | 10.8% |
| State Bank Of India | 10.8% |
| Standard Chartered Bank | 11% |
YES Bank | 11.0% |
IDFC FIRST Bank | 11.2% |
Kotak Mahindra Bank | 11.5% |
Axis Capital | 12.0% |
Care Edge | 12.0% |
| Nomura | 12.0% |
Bank of America Securities | 13% |
STCI | 14.1% |
End
Edited by Avishek Dutta
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