India’s industrial output growth slows to 4.9% in March as mining production loses steam

IIP is seen as a lead indicator of industrial growth data.

India's industrial growth slowed to 4.9 percent in March from 5.7 percent in February, data released by the Ministry of Statistics and Programme Implementation on May 10 showed.

For FY24, India's Index of Industrial Production (IIP) stood at 5.8 percent against 5.2 percent in the previous year.

In March 2023, India's industrial output had grown by 1.9 percent.

The decline in industrial growth in April compared to a month ago was down to the mining sector, whose output grew by 1.2 percent as opposed to an 8.0 percent increase in the February.

The slowdown in mining production growth did offset the greater rate of increase in the other two key sectors - manufacturing and electricity of 5.2 percent and 8.6 percent respectively compared to 5.0 percent and 7.5 percent a month ago.

Within the manufacturing sector, the growth rate of the top three positive contributors to the growth of IIP for the month of March 2024 are – basic metals (7.7 percent), pharmaceuticals, medicinal chemical and botanical products (16.7 percent), and other transport equipment (25.4 percent), as per the statement from the statistic's ministry.

The cumulative growth rates of the three sectors, mining, manufacturing and electricity for the period of April-March 2023-24 over the corresponding period of the previous year were 7.5 percent, 5.5 percent and 7.1 percent respectively.

In terms of the use-based classification of goods, production growth in March on a year-on-year basis was as follows:

>> Primary goods: 2.5 percent

>> Capital goods: 6.1 percent

>> Intermediate goods: 5.1 percent

>> Infrastructure goods: 6.9 percent

>> Consumer durable goods: 9.5 percent

>> Consumer non-durable goods: 4.9 percent

"The overall pattern of IIP growth continues to demonstrate unevenness and weakness in industrial recovery. The high frequency indicators such as steel production, coal production, electricity output, etcetera for the month of April 2024 indicate a moderation in industrial activity. Thus, Ind-Ra expects Y-o-Y growth of IIP to come in at around 4 percent in April 2024," according to India Ratings' Sunil K Sinha and Paras Jasrai.

A slowdown in India's industrial output in was expected after India's eight core sectors posted a growth of 5.2 percent in March, lower than February's 7.1-percent figure. This is because these core industries make up more than 40 percent of the weight of the IIP.