Strong capex, manufacturing growth drive India’s industrial output in July: Experts

New Delhi, Aug 29 (IANS) India’s industrial activity remains resilient with strong manufacturing and investment-led growth cushioning economy against global uncertainties, economists and experts said on Saturday after latest Index of Industrial Production (IIP) data showed a 6.7 per cent year-on-year rise in July.

Industrial production grew 6.7 per cent year-on-year in July supported by a 7.3 per cent rise in manufacturing and 8.7 per cent growth in electricity and gas supply, while manufacturing growth was broad-based with 19 of 23 industry groups recording positive growth during the month.

Rajani Sinha, Chief Economist, CareEdge Ratings said industrial activity has remained largely resilient in the current fiscal despite global uncertainties and elevated energy prices.

She highlighted the strong performance of capital goods and infrastructure/construction goods, which grew 16.1 per cent and 6.9 per cent, respectively and said the numbers were encouraging for investment activity.

Meanwhile, Shashwat Singh, Fundamental Analyst at Bajaj Broking said the July data showed a clear investment-led growth pattern with capital goods rising 16.1 per cent, intermediate goods 10 per cent and consumer durables 10.5 per cent.

He noted that 19 of 23 manufacturing groups expanded, led by electrical equipment, motor vehicles, other transport equipment, and machinery and equipment.

“The item-level detail supports this reading — switchgear and circuit-protection apparatus, UPS and solid-state drives, auto components, passenger and commercial vehicles, construction machinery, pumps of all types and turbines,” Singh said.

Similarly, Rajeev Sharan, Head of Research, Brickwork Ratings said strong growth in consumer durables, including vehicles and appliances, indicated that discretionary and credit-linked purchases remained firm.

However, the outlook remains mixed with consumer non-durables declining 1 per cent in July, pointing to some weakness in everyday consumption.

Sinha said rising inflation, weather-related disruptions and their impact on rural demand would need to be monitored. At the same time, strong capital goods and infrastructure output, along with resilient manufacturing, provide a positive base for industrial growth going ahead.

Singh said the key variable to watch would be crude oil prices and the impact of geopolitical developments on energy costs and demand.

–IANS

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