April factory growth soars 134% on low base effect

NEW DELHI: Industrial output growth shot up to 134.4% in April, largely due to the low base of last year, as economists cautioned against reading too much into the data for the month and pointed to the slowdown in activity as evident from more recent numbers.
The NSO said that the nationwide lockdown to restrict the spread of Covid-19 pandemic from the end of March 2020 had led to a majority of the establishments not operating in April 2020 and consequently, there were many units which reported ‘nil’ production, affecting comparison of the indices for the months of April 2020 and April 2021. Last year too, the NSO had not released the complete data due to the impact of the slowdown on gathering numbers.

The IIP reading of 126.6 in April 2021 was almost nearly the same as April 2019 level of 126.5, indicating that industrial activity had inched back to the level registered two years ago. Since March 2021, there was a 13% drop, pointing to lower economic activity due the lockdown announced by several states to contain the second wave.
Economists said the April numbers should be ignored. “IIP growth numbers in April and May were bound to be exaggerated this year as last year output had come to a standstill in most sectors. Therefore, the growth numbers for April which are exceptionally high need to be ignored,” said Madan Sabnavis, chief economist at Care Ratings.

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