The industrial output not only grew at a faster pace at 11.9 per cent in August as compared to 11.5 per cent a month ago, but also rose 3.9 per cent as compared to pre-Covid level, data released by ministry of statistics and programme implementation showed.

       However, the double-digit growth in industrial output can be attributed to the impact of a low base. Industrial production in volume terms, as measured by the index of industrial production (IIP), contracted 7.1 per cent in August last year due to the disruption caused by the pandemic.

       The cumulative growth during April-August (2021-22) was 28.6 per cent, compared to a contraction of 25 per cent during the same period a year ago.

       “As expected, the IIP expansion recorded a mild improvement to 11.9 per cent in August 2021 from 11.5 per cent in the previous month, driven by the positive impact of subdued rainfall on mining and electricity, even as manufacturing growth moderated,” Aditi Nayar, Chief Economist at Icra said.

       Manufacturing sector output, which accounts for more than 77 per cent of the entire index, grew 9.7 per cent YoY in August as compared to a contraction of 7.6 per cent last year. On a sequential basis, it contracted moderately at 0.5 per cent.

       Growth in electricity generation stood at 16 per cent YoY in August as compared to 1.8 per cent contraction a year ago, but witnessed 2.2 per cent growth sequentially.

       Mining activity, which accounts for over 14 per cent of the entire index, grew 23.6 per cent YoY, as compared to a contraction of 8.7 per cent, but witnessed a degrowth of 0.8 per cent sequentially.

       “Encouragingly, the IIP rose by 3.9 per cent in August 2021 relative to the pre-Covid level of August 2019, led by all the categories except consumer durables, highlighting the enduring impact of the pandemic on big-ticket demand,” Nayar said.

       Consumer durables output witnessed 8 per cent growth in August as compared to a contraction of 10.2 per cent during the same period last year. Consumer non-durables output witnessed a degrowth of 5.2 per cent in August, as compared to a contraction of 3 per cent last year.

       Capital goods output, which is reflective of the private sector investment scenario, grew 19.9 per cent, as compared to 14.4 per cent contraction last year.

       Nayar, however, warned that with excess rainfall affecting mining, electricity and construction activities, and the non-availability of semiconductors impinging upon auto output, IIP growth may dip sharply to 3-5 per cent in September.

       “Subsequently, the healthy GST e-way bill generation for early October 2021 suggests inventory buildup ahead of the festive season, which 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.