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.

The May IIP data were also accompanied by a note from the Ministry of Statistics and Programme Implementation (MoSPI) stating that it had made a major change to the methodology for computing growth for some sectors. It had abandoned the Wholesale Price Index as its chosen deflator to estimate the value of production in favour of the new Producer Price Index. This is a more accurate approach. But it did not, however, answer why this change was implemented belatedly and not when the new series of data was introduced on June 1. It suggests an unusually unsystematic approach by MoSPI. The strong growth in the IIP also does not reconcile with the fact that the Index of Eight Core Sectors — a separate government measure of industrial growth — grew at its second-lowest rate in 21 months in May. The core sector index is still outdated while the other major indices have been recently updated, but such a discrepancy nevertheless raises questions about what exactly is being measured.