India's industrial output grew at the slowest pace since January this year, amidst slower growth in manufacturing. The Index of Industrial Production grew 4.2% in June, as compared to a revised estimate of 6.2% in May, according to data published by the Ministry of Statistics and Programme Implementation on Monday.
One of the key factors for the slowdown in the IIP is the decline in manufacturing sector growth to 2.6%. This is possibly due to excessive summer heat conditions in many parts of the country in June apart from inventory rationalisation in some sectors, such as auto, according to Suman Chowdhury, chief economist at Acuité Ratings & Research
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Given the lower industrial output in the first quarter along with lower-than-expected profitability, weaker GVA growth in the manufacturing sector may pull down GDP growth in Q1FY25 to below 7%.Suman Chowdhury at Acuité Ratings & Research
However, an expectation of a strong revival in rural demand and better export prospects in the second half of the year may enhance IIP growth in the subsequent quarters, he added.
Sectoral Estimates (YoY)
Mining output rose 10.3% in June, compared to 6.6% in May.
Manufacturing output grew 2.6%, compared to 5% in the previous month.
Electricity generation rose 8.6%, compared to 13.7% last month.
Industrial output, as classified by the end use of goods, showed:
Primary goods output rose 6.3%, compared to 7.3% in May.
Capital goods output increased 2.4%, compared to 2.9% last month.
Intermediate goods output grew 3.1%, compared to 3.9% in the previous month.
Infrastructure and construction goods output gained 4.4, compared to 6.3%.
Consumer durables output rose 8.6%, compared to 12.6% last month.
Consumer non-durables output fell 1.4%, compared to a rise of 2.5% in May.
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