IIP continued to recover in Oct, but Omicron can pose a future risk: FinMin

A day after the Industrial Production Index (IIP) in October gave a blurry picture of factory output, particularly capital goods, the automotive sector and fast-moving consumer goods, the Treasury Department radiated confidence on Saturday that the economic recovery is likely to accelerate further. get well soon. FinMin said the recovery will remain resilient in the remaining two quarters of the current fiscal year after the second quarter delivered 8.4 percent GDP growth.

However, the ministry viewed the Omicron variant of the coronavirus as a risk to the global recovery, while also citing preliminary evidence to make the point that the mutation of the variant is expected to be less severe, mainly due to increasing vaccination in the country.

In its latest monthly economic report for November, the Ministry of Economy said IIP continued to recover in October 2021, led by infrastructure and intermediates recovery above their corresponding pre-pandemic levels.

It said IIP recovered further in October this year, reaching 108 percent of its October 2019 pre-pandemic level, with a 107 percent recovery in the manufacturing sector, 110 percent in the mining sector and 115 percent in

“All usage-based categories witnessed full recovery or more, with infrastructure and intermediate goods leading the way with a 117 percent recovery from October 2019 levels,” the department said.

Within the manufacturing sector, industries such as textiles, food, base metals, non-metallic minerals and computer electronics showed strong recovery compared to the corresponding pre-pandemic levels of October 2019.

Rahul Bajoria, chief economist of Barclays India, pinned hopes for increased government spending, especially capital spending.

"Still, Omicron, a new variant of COVID-19 may pose a new risk to the ongoing global recovery. However, preliminary evidence suggests that the Omicron variant is expected to be less severe and more likely to become more severe as the vaccination rate in India increases." it said.

About 80 percent of active cases are in Kerala, Maharashtra, Tamil Nadu, West Bengal and Mizoram.

The report said the agricultural sector has been the basis on which India's economic contraction has been minimized in FY21 and the recovery accelerated in FY22.