India’s Index of Industrial Production (IIP) grew 3.8% over the previous year, a four month high. (Largely because the headline number of 4% of April was revised down to 3.36%)
While this is interesting, the real story is that manufacturing continues to do well at +4.6%. Mining, however dipped below zero, and Electricity generation which had done so well recently, fell substantially.
In a way this is real growth, since the IIP measures production quantities, not revenues or rupee numbers. The point being: you could manufacture the same quantity of something but price it higher (inflation) to get a higher rupee number, but the real growth is number of units produced.
But let’s not kid ourselves. Even 3.8% is terrible. We should be at the 6-7% numbers to be even remotely sounding like we’re really growing.
Use based: Consumer Durables
In what is the only interesting part of this picture, IIP has grown in the consumer durables space at 16%. The rest are just so-so.
Our View: The markets are hoping for some good news and this might be it. However it’s only good relative to its recent past, and even that too has been revised downwards. The Power of IIP may only be in specific verticals like Tobacco or Textiles, but the broad sector references only tell us that a) Manufacturing did well and b) Consumer durables did well. The rest of it wasn’t very exciting at all.
