India’s industrial output slowed in February with growth declining to a six-month low of 2.9 percent in February from 5.2 percent in the previous month, data released on April 11 shows.
The trend mirrors the performance of the core sector, which has a 40 percent weight in the index of industrial production (IIP).
"As expected, the leap year base pulled down the YoY growth of the IIP to 2.9 percent in February 2025 from 5.2 percent in January 2025, largely in line with ICRA’s forecast for the month (+3 percent). The deceleration was broad-based, with all the use-based categories, as well as two of the three sectors barring electricity, witnessing a slower growth in February 2025 vis-à-vis the previous month," said Aditi Nayar, chief economist, Icra.
Data released in March showed that growth in the core sector or infrastructure industries slipped declined to its lowest in five months at 2.9 percent in February from 5.1 percent in the previous month.
In the April-February period, growth at 4.1 percent was slower than 6 percent witnessed during a similar period in the previous fiscal.
Among the three major sectors, electricity was the only sector to grow at a faster clip at 3.6 percent compared with 2.4 percent in the previous month, while growth in manufacturing and mining sectors tapered.
Manufacturing grew 2.9 percent in February compared with 5.8 percent in the previous month, while mining growth slowed to four-month low of 1.6 percent from 4.4 percent in February.
Use-based industries data shows growth slowing in all six sectors. Consumer non-durables continued to contract at 1.8 percent compared with 0.3 percent slump in the previous month, while consumer durables, growth declined to 3.9 percent from 7.2 percent.
Capital goods and infrastructure sector continued to post better numbers. Capital goods growth at 9 percent was only slightly slower than 10.3 percent in the previous month, whereas construction goods industry witnessed a decline to 6.4 percent from 7.4 percent in the previous month.
Primary goods growth was half at 2.8 percent compared with 5.5 percent in the previous month.
Manufacturing, the largest component of India’s industrial index, is expected to grow 4.3 percent in FY25 against a growth of 12.3 percent in the previous fiscal.
The performance also reflects the slight pickup in government capex, which reached only 80 percent of the full year target in the eleven months of the fiscal.
March is unlikely to show a different trend, according to economists.
"While the growth performance of mining is expected to deteriorate in March 2025 relative to February 2025, this is likely to be offset by an uptick in electricity generation, amid steady manufacturing growth. ICRA expects the IIP growth to print at ~3.0% in March 2025, similar to the levels seen in February 2025," Nayar said.
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