Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research
“While the Indian economy has been on a gradual recovery path since Q1FY21, Manufacturing PMI at a multiyear high in Oct 2020 had already given an early signal that the industrial recovery has picked up speed. IIP print in positive zone at 0.2% YoY in Sep 2020 after a protracted period of contraction, reinforces that expectation. While the manufacturing sector has continued to witness a contraction albeit marginal at 0.6%, the electricity and the mining sector have recorded visible output growth at 4.9% and 1.4% respectively. Both consumer durables and non-durable sector have recorded 2.8% and 4.1% growth respectively in Sep as compared to a significant contraction in Aug 2020, partly driven by rural demand and also an expectation of an overall demand pickup in the festive season. It is also encouraging to see a positive growth in infrastructure and construction possibly driven by higher government spending. If the momentum in IIP persists over the next 2-3 months, the extent of contraction in GDP in FY21 may be lower than earlier expectations.”
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