India’s industrial output growth, as measured by the Index of Industrial Production (IIP), expanded by 5.1 per cent in May this year on an annual basis. The May reading follows April’s industrial output growth of 4.9 per cent, which marked the first release under the revamped IIP series with 2022-23 as the new base year, incorporating an updated product basket, revised weights and broader sectoral coverage.
As per the data released by the Ministry of Statistics and Programme Implementation (MOSPI), growth in the electricity and gas supply sector expanded by 9.9 per cent during last month. Manufacturing, as well as water supply, sewerage and waste management sectors, posted a 5.5 per cent growth. However, the mining and quarrying sector proved to be a laggard, decelerating by 1.6 per cent.
Alongside the May data, MoSPI announced that it has replaced the Wholesale Price Index with the Output Producer Price Index as the deflator for the new IIP series, with 2022-23 as the base year. The ministry has revised the entire 2022-23 based IIP series using the Output PPI, superseding the WPI-based series released on 1st of this month.
MoSPI said the move would improve the estimation of real industrial output, as the Output PPI offers a more granular measure of producer prices for products whose output is reported in value terms. It added that the adoption aligns with international best practices and recommendations of the Technical Advisory Committee on the IIP base revision and will facilitate the eventual adoption of PPI-based volume estimation methods in the national accounts.
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