Industrial Output Surges Amid Energy Price Concerns

India's industrial output grew by 5.2% in February, driven by manufacturing expansion. However, rising energy costs and geopolitical tensions pose challenges. Despite these hurdles, domestic demand continues to offer support. Crisil highlights potential risks from energy prices and supply issues affecting manufacturing resilience.

India saw a 5.2% year-on-year increase in industrial output for February 2023, marginally surpassing January's figures, as reported by Crisil. The growth is attributed mainly to the manufacturing sector, which expanded significantly by 6%, despite slower performances in electricity and mining sectors.

Concerns over energy costs and input supply disruptions loom large. Ongoing conflicts in West Asia have escalated input costs and limited supply, presenting substantial downside risks to continued industrial growth in India.

Manufacturers are contending with the rising costs of essential energy inputs, which could hinder their operational capabilities. While domestic demand offers some resilience against these challenges, Crisil warns that extended geopolitical uncertainties might affect private-sector investments and stall economic recovery.