IIP Rises to 5.1% in May 2026, Highest in Five Months
India's Index of Industrial Production (IIP) recorded a year-on-year growth of 5.1% in May 2026 — a five-month high — up from 4.9% in April 2026.
The overall IIP index value rose to 122.7 in May 2026 from 116.7 a year earlier (base year 2022-23, new series).
Manufacturing, which carries the largest weight in the index (~76%), expanded 5.5% year-on-year and was the principal driver of overall growth.
Electricity and gas supply posted a strong 9.9% expansion, reflecting elevated power demand during the summer months.
Mining and quarrying was the only major sector to contract, declining 1.6% year-on-year.
Sub-sectors showing significant improvement included motor vehicles and auto components, and textiles.
Index of Industrial Production (IIP): Concept and Structure
The IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period, compiled and released monthly by the Ministry of Statistics and Programme Implementation (MoSPI).
The May 2026 IIP growth of 5.1% is measured on the new 2022-23 base series, making historical comparisons with pre-April 2026 data require base-adjustment caution.
Manufacturing as the Engine of IIP
Manufacturing's dominance in the IIP basket (~76% weight) means that its performance overwhelmingly determines the direction of the headline index.
Key Details
- Manufacturing growth in May 2026 was 5.5% year-on-year, driven by motor vehicles (auto sector recovery) and textiles.
- Under the use-based classification, Consumer Durables (which include motor vehicles) and Capital Goods are closely watched as proxies for domestic investment demand and consumer confidence respectively.
- Capital goods growth is treated as a leading indicator of private investment; infrastructure goods growth reflects government and public capital expenditure momentum.
- Manufacturing GVA is one of the two key inputs (alongside Services GVA) used in estimating India's GDP from the output side.
The 5.5% manufacturing expansion underpins the 5.1% headline IIP, with the motor vehicles sub-sector's recovery pointing to recovering urban consumer demand for discretionary goods.
Electricity as a High-Frequency Demand Indicator
Electricity generation and supply data in the IIP is a real-time proxy for overall economic activity, since virtually every industrial and household activity consumes power.
Key Details
- Electricity and gas supply grew 9.9% year-on-year in May 2026 — significantly above the headline IIP growth rate.
- Summer months (April–June) typically drive elevated electricity consumption due to cooling demand; this can create a seasonal upward bias in the electricity component.
- The Central Electricity Authority (CEA) tracks peak demand and energy supply separately; sustained high IIP electricity growth alongside record peak demand signals broad-based economic activity.
- Electricity generation is also tracked via the RBI's composite index of eight core industries (ICI), in which it carries a weight of 19.85%.
The 9.9% electricity growth in May 2026 reflects the combined effect of genuine economic momentum and seasonal summer demand, contributing meaningfully to the five-month high headline IIP.
- IIP growth in May 2026: 5.1% year-on-year (five-month high)
- IIP growth in April 2026: 4.9% (first month under the new 2022-23 base series)
- IIP index value: 122.7 (May 2026) vs 116.7 (May 2025)
- Sector-wise growth (May 2026): Manufacturing +5.5%, Electricity & Gas +9.9%, Mining −1.6%
- New IIP base year: 2022-23 (launched June 2026); previous base year: 2011-12
- Sectoral weights (2022-23 series): Manufacturing ~76%, Mining ~11%, Electricity & Gas ~11%
- Released by: Ministry of Statistics and Programme Implementation (MoSPI)
- Data release lag: 6 weeks after the reference month (last day of Month M+2)
- Use-based classification: Primary Goods, Capital Goods, Intermediate Goods, Infrastructure/Construction Goods, Consumer Durables, Consumer Non-Durables
- Eight Core Industries (ICI) — broader index with weights: Electricity 19.85%, Steel 17.92%, Refinery Products 28.04%, Crude Oil 8.98%, Coal 10.33%, Fertilisers 2.63%, Cement 5.37%, Natural Gas 6.88%