InvestorQ : What explains such a sharp bounce in the industrial production or IIP this month?
Rutuja Nigam made post

What explains such a sharp bounce in the industrial production or IIP this month?

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1 month ago
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The index of industrial production or IIP grew 22.35% in the month of March 2021. Remember, IIP is always reported with a lag of one month. However, you must know that this bounce in IIP was largely due to the abnormal base effect as Mar-20 was a very weak month on account of the onset of COVID last year. IIP actually fell by -18.5% in Mar-20 so the IIP growth in Mar-21 looks optically very attractive, although it may not be the case.

If you break up the IIP into 3 of its major components, you could see strong growth visible across manufacturing and electricity sectors and a more subdued growth in mining. There were also some positive upgrades of previous month’s IIP data. Despite the reality of the base effect, there has been heightened activity in the export-driven sectors. The only apprehension is that the COVID 2.0 could derail the nascent IIP bounce you are seeing.

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