Data doubts: on the latest IIP dataset

India’s latest industrial growth figures show that, contrary to global trends and overall perception, the country’s industrial output is getting stronger. Notably, the data show a quick bounce-back in industrial performance after the initial hit from the West Asia crisis. However, the new data also raise some important concerns about the composition of the growth, the systems behind the recent data upgrades, and the need for further improvements. Growth in the Index of Industrial Production hit a five-month high of 5.1% in May 2026, up from the 4.9% growth seen in April, which itself was a substantial improvement over the performance in March — the first full month after the West Asia crisis began. Within this, the manufacturing sector grew at a relatively robust 5.5% in May, albeit slower than in April. One view is that this is due to a revival in domestic consumption, since the consumer durables and non-durables sectors also grew at multi-month highs. Consumer durables, especially, have done well in April and May. However, the contrary argument is that domestic demand is in fact not doing well, and it is export growth that is leading to higher production. This is bolstered by the fact that GST revenues from domestic transactions have grown slower over the last six months than in 2025-26 and the year before that. Merchandise exports, on the other hand, hit a four-year high in April followed by an all-time high in May. It would certainly be welcome if India’s industry has global demand to fill, but the fact that more of this demand is not coming from within the country is a cause for concern. The economy is already hostage to world events.