"Industrial production continues to recover gradually and is broadly at pre-pandemic levels. Compared to January 2020, IIP was 0.7 per cent higher and witnessed growth in all three segments," according to the report
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With the ongoing Russia-Ukraine conflict’s impact on commodity prices, especially crude prices, we see downside risks to our growth estimates of 8.1 per cent (with crude at USD 80/bbl). Under various scenarios of average crude prices (US$120-80/bbl), we estimate fiscal year (FY) 2023 real GDP growth between 7.0-8.1 per cent, said Kotak Mahindra Bank on Monday.
The bank in a report 'Economy: IIP Growth Remains Weak', said that given the volatility in commodity prices and probable outcomes of the geopolitical tensions, the adverse risks to India’s inflation and growth outturns remain high.
The report mentioned that the larger risk to growth in FY2023 will be from the fallout of the ongoing Russia-Ukraine conflict. With global commodity prices remaining elevated with upside risks, India’s prospects for growth and inflation are likely to worsen. Supply-led increases in prices of crude oil, edible oils, fertilisers, metals, natural gas, etc. will weigh on consumer budgets.
Meanwhile, the Index of Industrial Production (IIP) activity in January however, increased 1.3 per cent, marginally higher than growth in December and reflecting some slowing of activity due to restrictions imposed to tackle the Omicron variant.
It added that on a sectoral basis, all components exhibited positive growth led by mining activity growing by 2.8 per cent (December: 2.6 per cent), manufacturing by 1.1 per cent (0.2 per cent), and electricity production by 0.9 per cent.
"Industrial production continues to recover gradually and is broadly at pre-pandemic levels. Compared to January 2020, IIP was 0.7 per cent higher and witnessed growth in all three segments," according to the report.
Some major segments that saw an increase in production (over January 2021) were clothing (21.8 per cent), computer electronics and optical products (20 per cent), and furniture (18.6 per cent), the report mentioned.
Segments that registered a fall were leather and related products ((-)19 per cent), transport equipment ((-)14.4 per cent) and electrical equipment ((-)9.7 per cent).