The release of initial estimates of the Index of Industrial Production (IIP) for the month of September 2021, according to the Finance Ministry, reveals a continued increase in industrial production. In FY 2021-22, the IIP increased from a Q1 average of 121.3 to a Q2 average of 130.2.
The IIP would have been even higher in Q2 if it hadn't been for severe monsoons affecting mining operations, particularly coal, and hence electricity generation, which slowed the total production index's increase, the Finmin said.
The manufacturing index in IIP has remained stable and is expected to rise in the coming months, following the eight-month high in the manufacturing Purchasing Manager's Index (PMI) of 55.9 in October 2021.
The latest levels of many High Frequency Indicators, such as E-way bills, electricity usage, and GST collections, show that activity levels have been continuously growing in FY 2021-22. GST revenues rose in FY 2021-22, reaching Rs.1.3 lakh crore in October 2021, the second largest monthly collection ever. This demonstrates the strength of the economic recovery. In October 2021, tractor sales reached a new high of 1,15,615 units, up 25% from September 2021 volumes, indicating continued expansion in the agricultural industry.
The release of Consumer Price Index (CPI) data for October 2021 shows that annual consumer price inflation is currently progressively declining in FY 2021-22. Annual CPI inflation fell from 5.6 percent in Q1 to 5.1 percent in Q2, and it was even lower in October of FY 2021-22, at 4.5 percent.
Similarly, Consumer Food Price Inflation (CFPI) has decreased from 4.0 percent in Q1 of FY 2021-22 to 2.6 percent in Q2 and then to 0.8 percent in October, indicating that supply-side interruptions in food distribution have diminished significantly.
With the fading of the pandemic, PMI services has surged to a decadal high of 58.4 in October 2021, indicating a robust comeback in the contact-based services sector. The average hotel occupancy rate in leisure destinations increased from over 55% in Q1 to over 60% in Q2 of FY 2021-22, demonstrating the service sector's growing optimism.
Exports are clearly emerging as India's economic engine, having surpassed $30 billion for the seventh month in a row in October of FY 2021-22. India's merchandise exports totaled $232.58 billion from April to October, rising 54.5 percent over the same period last year.
In FY 2021-22, planned commercial banks' outstanding credit has been steadily increasing. Retail credit, in particular, has been steadily expanding, indicating that the economy's spending is improving. According to CIBIL, between February and October 2021, inquiry volumes grew by 54%, indicating that economic activity has picked up.