India’s industrial output growth slowed to a three-month low of 4.97% in April, from an upgraded 5.4% pace in March, with manufacturing expansion slipping to 3.9%, from 5.8%, electricity generation accelerating, and production of consumer non-durables contracting for the third time in six months.
Compared with March, the Index of Industrial Production (IIP) slid 7.6% in the first month of this financial year, signaling a sequential downturn in output. Electricity generation rose 10.2% compared with a 1.1% contraction last April and was almost 7% higher than March levels as well, likely due to higher demand triggered by a heatwave in many parts of the country.
Within manufacturing, which constitutes 77.6% of the IIP, six of the 23 segments reported contractions, including food products (-12.7%), tobacco (-8.9%), leather (-8.6%) and wood products (-5.5%). In March, 10 segments had recorded a decline in production. Chemicals production was flat compared with last April.
Consumer non-durables’ output contracted 2.4% in April, while durables production surged 9.8%, with base effects from the year-earlier period skewing both numbers. The former had grown 11.4% in April 2023, while durables had tanked 2.3%.
Mining output grew 6.7% year-on-year in April, picking up from an upgraded uptick of 1.3% in March, which was the slowest in 19 months. Infrastructure and construction goods grew 8%, followed by primary goods, which were up 7%. Intermediate goods and capital goods, however, grew just 3.2% and 3.1%, respectively, sharply lower than their growth in March.
India Ratings and Research, which expects IIP growth to hover around 5% in May as well, flagged that capital goods and consumer non-durable items were still trailing pre-COVID output levels, along with 12 industries.
The firm’s economists said the divergence in consumer goods reflected the ongoing consumption patterns, which were skewed in favour of households belonging to the upper 50% of the income bracket. “This is worrisome, as such a pattern would not allow the overall consumption demand to become broad-based,” India Ratings’ Sunil Kumar Sinha and Paras Jasrai wrote in a comment on the data.
