India's industrial growth, as per the Index of Industrial Production (IIP), edged up to 1.9 percent in March from 1.5 percent in February, data released on May 12 by the Ministry of Statistics and Programme Implementation showed.
Industrial growth was not expected to show significant improvement in March after data released on April 29 showed the output of India's eight core sectors increased by 4.3 percent year-on-year in the last month of FY22, down from 6 percent the previous month.
With the eight core industries accounting for 40.3 percent of the total weight of IIP, industrial growth as per the IIP tracks the performance of these core sectors.
The meagre pick-up in industrial growth in March was matched by the manufacturing sector, whose output rose by 0.9 percent, slightly up from an increase of 0.5 percent posted in February.
The other two sectors - mining and electricity - saw their fortunes move in opposite directions. While electricity production grew at a faster rate of 6.1 percent, growth in mining output declined to 4.0 percent from 4.5 percent in February.
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Specifically, the production of capital goods was up a mere 0.7 percent year-on-year in March, down from an annual growth of 2.0 percent in February.
"The bleak three-month low 0.7 percent growth in capital goods output in March 2022 doesn't bode well for a pickup in investment activity in Q4 FY22," warned Aditi Nayar, ICRA's chief economist.
The fall in the growth of capital goods production will be a matter of concern for policymakers, who hope higher public capital expenditure will lead the way for India's economic recovery.