This was a true surprise. The October IIP came in at 3.6% v/s 0.5% (MoM), an 8-month high and the best performance since the pandemic hit us.

It was expected to be good but no one had really expected it to show such a sharp recovery; this was indeed a very deep “V!” With the festival season showing good all-round growth, automobile sales vrooming up and most of the consumer goods – white as well as perishable showing good demand, the month was expected to be good.

The sharp recovery was led by mainly manufacturing sector, which showed a growth of 3.5% v/s (-)0.2% and consumer durables grew 17.6% v/s 3.4% and consumer non-durables grew from 2.4% to 7.5%.

Other internals of the IIP: (MoM)

• Electricity 11.2% v/s 4.8%
• Mining (-)1.5% v/s 1.4%
• Primary goods (-)3.3% v/s (-)1.5%
• Capital goods 3.3% v/s (-)1.3%
• Intermediate goods 0.8% v/s (-) 1%
• Infra & construction 7.8% v/s 2.5%

The GDP for Q2 also had sprung a surprise, improving from a contraction of 23.9% to a contraction of 7.5% (QoQ), largely on account of the resilience exhibited by the domestic industries. Post this, many economic agencies have now revised upwards their growth forecasts for India.

ADB, on Thursday, revised its GDP growth for FY21, from the earlier projected contraction of 9% to 8% on the back of the much-better-than-expected recovery in Indian growth. RBI too revised it from a contraction of 9.5% to 7.5%.

All these point to an economic recovery but its still too early to say that we are out of the woods. This has to be sustainable but if the overall growth continues the way it does now, we will eventually have a positive GDP, maybe in Q4.