Manufacturing output’s growth during April eased to 3.9% from 5.8% in March, whereas mining growth rose to 6.7% from 1.3%.
India’s factory output growth, as measured by the Index of Industrial Production (IIP), fell to a three-month low of 5% in April as against 5.4% in March, due to a drop in manufacturing activity, data released by the National Statistical Office (NSO) showed on Wednesday.
Manufacturing output’s growth during April eased to 3.9% from 5.8% in March, whereas mining growth rose to 6.7% from 1.3%. Electricity output’s growth also increased to 10.2% in April from 8.6% in March.
At the use-based classification level, the highest growth was registered by the consumer durables at 9.8%, due to a favourable base effect. Consumer non-durable goods, however, witnessed a contraction of 2.4% in April. “This divergence in the two components of consumer demand is reflective of the ongoing consumer pattern, which is skewed in favour of households belonging to the upper 50% of the income bracket,” India Ratings and Research (Ind-Ra) said in a note.
Capital goods output growth fell to 3.1% in April from 6.6% in March, indicating muted investment activity in the economy, while infrastructure good’s output registered a strong growth of 8% as against 7.4% the previous month.
Economists say a sustained government capex push will continue to lend support to both capital and infrastructure goods even in FY25. The capex of the union and the 19 state governments grew 14.8% on year to Rs 1.07 trillion in April.
Going forward, a meaningful improvement in the overall consumption scenario remains crucial for the industrial activity, say economists.
“While prospects of good monsoon remain supportive of rural demand, the temporal as well as spatial distribution of monsoon is critical,” said Rajani Sinha, chief economist, CareEdge Ratings. “Also, elevated inflation specifically in the food basket remains a challenge for rural demand revival.”
For May, the high frequency indicators such as steel production, petroleum consumption, suggest that barring primary goods the industrial activity will be muted. Hence, Ind-Ra expects IIP growth to remain flat at 5% during the month.
Source:financialexpress.com