With West Asia embroiled in conflict, global growth is set to take a hit as supply disruptions impact economies around the world. India can’t escape, given our heavy reliance on crude oil shipped through the Strait of Hormuz that is currently under blockade both by Iran and the US.
In this backdrop, the index of industrial production data for March released on Tuesday assumes importance as an indicator. Thankfully, the emerging picture isn’t all that bad. Industrial production, according to the index, rose 4.1% year-on-year last month even as the war raged on. Though the lowest in five months, it reveals a degree of resilience.
Manufacturing output, the index’s biggest component, grew 4.3% in March from a year earlier; mining output grew 5.5%. Going by use-based classification too, the expansion was broad-based, although the month’s 14.6% growth in capital goods stood out.
That said, an industrial slowdown may begin to show up later as the knock-on effects of the war’s supply squeeze on various input costs gain force. How quickly the sector recovers will depend on how soon the fighting ends. Signs of a return to normalcy seem quite dismal at the moment, though.