911479 SIP myths you must know!

A resurgence in industrial production and demand owing to the easing of mobility constraints fuelled India’s recovery, with production appearing to have regained the lost ground, The Economic Times reported, quoting a study.

Moody’s Analytics’ study on reopening in the Asia-Pacific region, however, expressed concerns about inflationary instability brought on by rising food and fuel prices.

The daily quoted Steve Cochrane, chief APAC economist at Moody’s Analytics, as saying that since July industrial production has largely rebounded, and through September, it appears to have reclaimed all of the ground lost during the second wave of Covid-19.

He further said that easing mobility limitations will increase demand for local goods and services, simplify supply chains, ramp up electronics and auto parts facilities, and increase the flow of consumer goods supplies.

Having fully staffed manufacturing facilities would allow foreign trade to continue to be a strong basis for the region, the report said.

Growth in factory output

Industrial production, measured by the Index of Industrial Production (IIP), in August grew by 11.9% year-on-year in August, marginally up from 11.4% in July.

Industrial production expanded by 13.6% in June, 27.6% in May and recorded a massive 134% rise in April.

Factory output had contracted 7.1% in August last year due to disruption caused by the Covid-19 pandemic.

Manufacturing growth

In August, the manufacturing sector saw output increase by 9.7%. It had jumped by 34.5% in May and nearly 200% in April. Manufacturing accounts for more than 77% of the index

Manufacturing had seen in freefall during 2020 due to lockdowns across the county.

The capital goods segment, seen as an indicator of investment in industry, rose by 19.9% in August.

“With the excess rainfall affecting mining, electricity and construction activities, and the non-availability of semiconductors impinging upon auto output, we expect the IIP growth to dip sharply to 3-5% in September 2021,” Aditi Nayar of ICRA was quoted as saying in a report in moneycontrol.com

“Subsequently, a healthy goods and services tax e-way bill generation for early October suggests inventory build-up ahead of the festival season. This augurs well for the IIP print for the current month, even as continued constraints in the auto sector and the looming concerns on availability of coal and power pose risks,” she added.