India’s Factory Output Expands to Eight-Month High in April
The Index of Industrial Production rose 7.1% in April, data released by the Ministry of Statistics showed Friday.
(Bloomberg) -- India’s April factory output rose to the highest in eight months, signaling economic recovery after wider reopening from the pandemic, though rising prices may curtail demand.
The Index of Industrial Production rose 7.1% in April, data released by the Ministry of Statistics showed Friday. That compares with a 2.2% increase in March, and an estimate for a 5% increase in a Bloomberg survey.
Domestic demand is powering the Indian economy from the pandemic-induced slump but geopolitical tensions threaten to thwart the nation’s nascent recovery. Rising commodity prices and supply chain disruptions have further fueled inflationary concerns forcing the country’s central bank to cumulatively raise rates by 90 basis points this year to tame prices.
“Consumption remains tentative on the whole, with underlying unevenness,” said Aditi Nayar, an economist with Icra Ltd. In Delhi. “Led by pent-up demand, we expect services to outperform the demand for goods in the near term, with the latter further constrained by elevated prices.”
The rise in industrial output in April was led by an 11.8% increase in electricity output from a year ago. Manufacturing grew 6.3%, while mining increased by 7.8%.
A separate survey of factory managers earlier showed momentum in manufacturing activity was intact in May. While Fitch Ratings on Friday revised its outlook for India to stable from negative, citing diminishing downside risks to medium-term growth, it lowered the growth forecast for the current year to 7.8% warning of risks from high commodity prices.
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