IIP growth slows to 9-month low of 1.2% as electricity, mining contract
Data released by the National Statistics Office (NSO) on Monday showed the index of industrial production (IIP) rose by 1.2% in May lower than the 2.6% in April and below the 6.3% recorded in May last year. The early onset of the monsoon was seen as a factor behind the contraction of the electricity and mining sectors. The electricity sector fell 5.8% in May compared to 13.7% growth in May last year, while the mining segment fell 0.1% during the month compared to 6.6% expansion in May last year.
The manufacturing sector, which accounts for a bulk of the index, slowed to 2.6% in May compared to a growth of 5.1% in May last year. "The early onset of the monsoon doused activity in mining and the demand for electricity, with both these sub-sectors of the IIP reporting a contraction in May 2025, amid an anaemic growth of manufacturing," said Aditi Nayar, chief economist at ratings agency ICRA.
"Moreover, the underlying trends were uneven, with three of the use-based categories displaying a contraction, amid a continued high 14.1% expansion in capital goods, boosted by a low base. Tepid industrial volume growth in the first two months of the quarter doesn't augur well for industrial gross value added (GVA) growth in Q1 FY2026," said Nayar.
The capital goods sector, which is seen as a key gauge of investment, rose by 14.1% in May compared to a growth of 2.6% in May last year.
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