Crisil Economy First Cut: A tad higher

The Index of Industrial Production (IIP) edged up to 5.2% on-year in February from 5.1% in January, driven by stronger growth in manufacturing (6% vs 5.3%) but partially offset by slowdown in electricity (2.3% vs 5.1%) and mining (3.1% vs 4.3%).

A statistical low-base effect also supported the gauge.

While headline IIP growth remained broadly steady at 4.1% in fiscal 2026 (April-February) compared with the year-ago period, manufacturing growth strengthened to 5% from 4.1%. Double-digit growth in infrastructure and construction goods (10.2% vs 6.4%) led manufacturing IIP growth, followed by capital goods (7.5% vs 5.8%) and intermediate goods (5.8% vs 4.3%).

A combination of higher prices and tighter supply of critical inputs due to the ongoing conflict in West Asia has imposed downside risks to industrial output. With gas (natural and liquefied gas) availability under pressure, the government has tried to ration supplies to industries. However, those with heavy dependence on gas and derivatives as key inputs could see disruptions in their output.