Industrial output in India measured by the Index of Industrial Production (IIP) expanded 5.0 per cent year on year for the month of April 2024, over the corresponding period of previous year, pushed by mining, manufacturing and electricity.
“The IIP growth rate in April 2023 was 4.6 per cent. The growth rates of the three sectors for the month of April 2024 over April 2023 are 6.7 per cent in mining, 3.9 per cent in manufacturing and 10.2 per cent in electricity, according to official data released on Wednesday. The industrial production was however a moderation on-year in April from 5.4 per cent in March 2024.
Within the manufacturing sector, the three positive contributors to the growth of IIP for the month of April 2024 are – manufacture of basic metals which recorded 8.1 per cent growth, manufacture of coke and refined petroleum products which grew 4.9 per cent , and manufacture of motor vehicles, trailers and semi-trailers.
Based on use-based classification, top three positive contributors to the growth of IIP for the month of April 2024 are – primary goods, infrastructure/construction goods and consumer durables.
The corresponding growth rates of IIP as per use-based classification in April 2024 over April 2023 are 7.0 per cent in primary goods, 3.1 per cent in capital goods, 3.2 per cent in intermediate goods, 8.0 per cent in infrastructure/construction goods, 9.8 per cent in consumer durables and -2.4 per cent in consumer non-durables.
According to Dipti Deshpande, Principal Economist, CRISIL, manufacturing IIP growth saw a sharper slowdown to 3.9 per cent from 5.8 per cent in March 2024. However, both overall IIP and manufacturing IIP grew sequentially on a seasonally adjusted basis. “The slowdown was primarily driven by capital and intermediate goods and consumer non-durables. Capital and intermediate goods were impacted by slowing exports. And weakness in consumer non-durables continues, with growth trailing durables on average in the past 12 months. That reflects weaker demand from the lower income segments,” says Despande.
However, infrastructure and construction goods IIP growth strengthened, indicating continued support from government’s infrastructure spending and private real estate activity, as per Crisil study. Domestic demand could see some rebalancing this fiscal as rural demand catches up with urban consumption. The expectation of an above-normal monsoon augurs well for rural incomes. Rainfall distribution will have a bearing on agriculture and overall economic outlook.
The urban economy, which has been strong so far, could be tempered by tighter credit conditions this fiscal. Retail credit growth has been moderating in recent months. The Reserve Bank of India’s recent survey showed moderating consumer confidence in the urban areas.
