The latest release is the second monthly Index of Industrial Production (IIP) based on the new series with 2022-23 base year. Industrial output had expanded 3.4% in May 2025.
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“The performance is encouraging as it appears we are on a higher growth path notwithstanding the global environment… due to steady domestic demand conditions,” Madan Sabnavis, chief economist at Bank of Baroda, said.
India Ratings and Research (Ind-Ra) expects industrial production growth to strengthen to 5.7% in June, while Bank of Baroda projects growth in the 4-5% range.
“The IIP growth inched up in May on the back of a sharp acceleration in electricity generation growth, driven by elevated temperatures as well as a low base,” Rahul Agrawal, principal economist at ICRA, said.
Electricity & gas supply grew 9.9% in May compared with 4.6% in April. Manufacturing output and water supply, sewage & waste management recorded 5.5% growth each in May.Manufacturing was supported by double-digit output growth in motor vehicles (passenger and commercial vehicles), textiles, transport equipment, computers and electrical equipment. Of the 23 industry groups, 16 registered positive growth during the month.
Mining, however, contracted 1.6% in May.
The statistics ministry has shifted to using the output Producer Price Index as the deflator for items where output is collected in value terms, moving from the Wholesale Price Index previously. This affects 234 out of the 463 item groups in the IIP basket, representing 36.02% of the total index weight.
The use-based classification showed broad-based strength, with healthy growth in capital goods as well as consumer durables and non-durables.
Capital goods production posted the strongest expansion at 12.9% year-on-year in May, up from 12% in April. Consumer durables growth accelerated to 7.2% from 5.6%, while consumer non-durables rose 3.6%, compared with just 0.2% in the previous month.
“High-frequency data shows urban demand was the driver of domestic demand,” Dipti Deshpande, principal economist at Crisil said.
Among other categories, primary goods output increased 2.6% in May, while intermediate goods and infrastructure/construction goods grew 5.8% and 5.9%, respectively.