India’s industrial production growth improved to 5.2% YoY in May-23 from 4.5% in Apr-23.
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India’s industrial production growth improved to 5.2% YoY in May-23 from 4.5% in Apr-23. While on a seasonally adjusted basis the index contracted in May-23, on a FYTD basis performance remains strong sequentially. This resonates with most other high frequency indicators of industrial activity which have continued to perform well into Q1 FY24. Also, the annualized IIP growth for May-23 marks the first normalized reading in the post COVID era, with growth over 2020, 2021 and 2022 all suffering from either supply distortions or base disruptions. From a broader perspective, the recovery in industrial activity continues to remain uneven with outperformance of investment-oriented production witnessing an offsetting impact from consumption-oriented production. The continued thrust on public investments which could spill over to private investment cycle in FY24, continues to be in support of industrial activity despite an adverse global growth and trade milieu. Looking ahead, we expect industrial activity in FY24 to moderate somewhat from its growth of 5.2% in FY23 - in line with our FY24 GDP growth forecast of 6.0% vis-à-vis 7.2% in FY23.