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Economy 13-May, 2024

India’s industrial output eases to 4.9% in March: Grows 5.8% in FY 2023-24

By: Team India Tracker

India’s industrial output eases to 4.9% in March: Grows 5.8% in FY 2023-24

Economists believe that consumer goods have rebounded in March, supporting the notion that spending will increase as the year draws to a close. Image Source: IANS

Electricity grew at a five-month high of 8.6 percent, while mining grew at just 1.2 percent, at a five-month low.

In March 2024, the IIP growth rate compared to the same period in the previous year was 4.9 percent. For the month of March 2024 compared to March 2023, the growth rates of the mining, manufacturing, and electricity sectors are 1.2 percent, 5.2 percent, and 8.6 percent, respectively. In the manufacturing sector, "Manufacture of basic metals" (7.7 percent), "Manufacture of pharmaceuticals, medicinal chemical, and botanical products" (16.7 percent), and "Manufacture of other transport equipment" (25.4 percent) have the highest growth rates when it comes to the growth of IIP for the month of March 2024. For the period of April–March 2023–24, the cumulative growth rate compared to the same time in the prior year is 5.8 percent.

For the April–March 2023–24 period, the three sectors' cumulative growth rates over the comparable period of the previous year are 5.5 percent, 7.1 percent, and 7.5 percent, respectively, in the mining, manufacturing, and electricity sectors.

Electricity grew at a five-month high of 8.6 percent, while mining grew at just 1.2 percent, at a five-month low. Within manufacturing, output of eight of the 23 sub-sectors contracted year-on-year, which included food products, electronic goods, and petroleum products. “The negative growth in electronic products is a concern because there has been a PLI push here,” said Madan Sabnavis, chief economist, Bank of Baroda.

Economists believe that consumer goods have rebounded in March, supporting the notion that spending will increase as the year draws to a close. According to Sabnavis, "both durable and non-durables have done well." "Since the rabi crop is predicted to be good and the wedding season should fuel spending in April and May, this should be sustained. “March saw the largest sequential increase in manufacturing output in a year—8.2 percent—which happens every year.

The IIP growth during the February–March period, however, was less than the 9.1 percent average rise during the same period during the previous 12 years. The final two months of FY24 saw a decline in petroleum products, which make up 15 percent of the manufacturing index.

Economists conclude that this mostly points to a deterioration in domestic demand conditions. Consumer durables saw a decrease in output growth to 9.5 percent in March from 12.4 percent in February within the use-based category, while consumer non-durables saw an increase to 4.9 percent from (-) 3.5 percent. The rise in intermediate goods output dropped to 5.1 percent from 8.7 percent in February, while the growth in infrastructure goods output slipped to 6.9 percent in March from 8.5 percent in February.

Conversely, the growth in capital goods output increased significantly from 1 percent in February to 6.1 percent in March. India Ratings and Research states that the general pattern of IIP growth "continues to demonstrate unevenness and weakness in the industrial recovery." High-frequency indicators that show a moderation in industrial activity include the production of steel, coal, and power in April.

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