Industrial production growth slows to 4.9% in March

NEW DELHI: Industrial growth declined to 4.9% in March from 5.7% in February, according to data released on Friday by the Ministry of Statistics and Program Implementation.

For FY2424, the Index of Industrial Production (IIP) increased by 5.8%, compared to 5.2% in the previous year. In March 2023, IIP increased by 1.9%.

The slowdown in IIP in March compared to February was mainly due to the mining sector, which recorded a growth of 1.2%, significantly lower than the 8% growth recorded in February. The manufacturing (with an increase of 5.2%) and electricity (8.6%) sectors indeed supported the IIP.

According to the data, the three largest sources of IIP growth in March 2024 in the manufacturing sector were basic metals (7.7%), pharmaceutical products, medicinal chemicals and botanical products (16.7%), and other transport equipment (25.4 %). The cumulative growth rates for the mining, industrial processing and electricity sectors for the period of fiscal year 24 compared to the same period of the previous year amounted to 7.5%, 5.5% and 7.1%, respectively.

According to Aditi Nayar, Chief Economist, Research and Outreach, ICRA, “IIP growth saw an expected decline to 4.9% in March 2024 from 5.6% in February 2024, with the end of the leap year effect. The increase in IIP was driven by strong electricity expansion, with demand rising as a result of rising temperatures and being dampened by modest increases in mining. “Output growth rose to its highest level in five months, albeit at a very low level.” Production of consumer durables increased by 9.5%, while growth in the production of non-durable goods turned positive at 4.9% after two consecutive months of decline.

“The consumption scenario in FY24 remained mixed, with urban demand showing resilience, while rural demand continued to lag. Expectations of good monsoons, moderate inflation and signs of revival in rural demand are positively influencing the overall consumption scenario. ” says Rajani Sinha, chief economist at CareEdge Ratings.