India's Industrial Production Surges 5.2% In February - Here's Why

India's industrial production (IIP) in February surged to 5.2% as against 4.8% in January as a result of higher manufacturing activity, and recovery in capital goods output.

The rise in IIP was largely driven by manufacturing sector, which saw 6% growth last month as against 4.8% recorded in January. Meanwhile, the capital goods output witnessed an uptick of 12.5% supported by  investment and infrastructure activity as compared to 4.1% in January. 

Coming to infra and construction linked goods, the growth in demand was robust at 11.2%, but remained slower than 14.6% in January.

On the consumer durables end, the production rose by 7.3%, while non-durable consumer goods declined 0.6%, signalling a mixed trend and weakness noted in essential goods consumption.

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Meanwhile, Infrastructure and construction goods rose 11.2%, and intermediate goods surged 7.7%, indicating steady pace in key sectors. However, the primary goods segment fell to 1.8%.

Overall in manufacturing, 14 of the 23 industry groups recorded positive growth with main contributors being motor vehicles, machinery, and equipment, and basic metals.

While expectations are high that activity will be impacted in March due to LPG shortages, the  IIP index stands at 159.0, signalling a year-on-year (YoY) growth. 

The fresh IIP data indicates a improvement in industrial activity across India, however, the divergence noted in several sectors signals uneven demand, with investment-led growth overpowering consumption tendencies.