The increase in manufacturing output in April decreased to 3.9% from 5.8% in March, while the growth in mining output increased to 6.7% from 1.3%.
Due to a decline in manufacturing activity, India’s industrial production growth, as indicated by the Index of Industrial Production (IIP), dropped to a three-month low of 5% in April from 5.4% in March, according to statistics provided by the National Statistical Office (NSO) on Wednesday.
The increase in manufacturing output in April decreased to 3.9% from 5.8% in March, while the growth in mining output increased to 6.7% from 1.3%. Additionally, the growth in electricity output jumped from 8.6% in March to 10.2% in April.
Due to a favorable base effect, consumer durables saw the most rise at the use-based classification level, with a rate of 9.8%. On the other hand, consumer non-durable goods shrank by 2.4% in April. India Ratings and Research (Ind-Ra) stated in a note that “this divergence in the two components of consumer demand is reflective of the ongoing consumer pattern, which is skewed in favor of households belonging to the upper 50% of the income bracket.”
The growth in capital goods output decreased to 3.1% in April from 6.6% in March, suggesting a slowdown in economic investment. In contrast, the output of infrastructure products saw a robust 8% increase in April compared to 7.4% in March.
According to economists, even in FY25, the government’s persistent push for capital expenditures will support both capital and infrastructure products. Capex for the federal government and its 19 states increased by 14.8% year over year to Rs 1.07 trillion in April.
Economists predict that going forward, a significant improvement in the general consumption picture will continue to be essential for industrial activity.
“The temporal and spatial distribution of the monsoon is critical, even though prospects of a good monsoon continue to support rural demand,” stated Rajani Sinha, chief economist at CareEdge Ratings. “Moreover, high inflation, particularly in the food basket, continues to be a barrier to the revival of rural demand.”
High frequency indicators for May, such petroleum consumption and steel output, imply that industrial activity will be low, with the exception of primary goods. Ind-Ra thus projects that IIP growth will be steady at 5% for the duration of the month.