Mumbai, Feb 12 (SocialNews.XYZ) Unwinding of lockdown restrictions as well as RBI's monetary policy stance are expected to boost India's industrial output.
Notably, subdued manufacturing growth as well as unfavourable base eased India's industrial output sequentially as well as on a year-on-year basis in December 2021.
Last Friday, the Index of Industrial Production (IIP) for December 2021 rose by only 0.4 per cent from a rise of 1.34 per cent reported for November 2021.
Similarly, the production rate was lower on a year-on-year basis. In December 2020, the IIP had risen by 2.2 per cent.
On a YoY basis, the mining excavation output grew by 2.6 per cent from (-) 3 per cent in December 2021.
However, manufacturing production slipped by 0.1 per cent from a rise of 2.7 per cent and electricity generation rose at a slower rate of 2.8 per cent from 5.1 per cent.
"While the improvement of industrial output on sequential basis is encouraging, the emergence of the third Covid wave amidst significant proliferation of Omicron cases in Jan-22 may have some impact on the production in Jan-22," Acuite Ratings & Research said in a research note.
"Additionally, the rise in input price pressures due to substantial rise in commodity prices may lead to a further pass through to end consumers in the medium-term impacting demand and thereby overall production."
However, the ratings agency believes that good progress in the pace of vaccinations, unwinding of lockdown restrictions by states amidst recent downdraft in Covid infections along with the accommodative monetary policies will support industrial recovery going forward.
"Further, thrust on infrastructure segment with the government embarking upon massive capital outlay underscored in the Union Budget FY23 will help in bolstering steel, cement and capital goods output over the next few quarters."
Accordingly, India's Union Budget FY23's investment led push in infra sector is expected to boost industrial production growth.
The majority of Budget 2022-23 massive Capex outlay -- Rs 7.50 lakh crore -- will be spent on infrastructure development.
Source: IANS
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