India’s Industrial Growth Faces 6.2% Slowdown in FY25, Promising Revival on Horizon
NEW DELHI: Brace yourself for a slight slowdown in India’s industrial growth forecast for the fiscal year 2025. According to advance estimates, the industrial sector is projected to expand by 6.2 per cent, a dip from the previous year’s 9.5 per cent surge. The Bank of Baroda report attributes this deceleration to the base effect and a lackluster performance in manufacturing during the first half of the year.
Anticipate a Shift in Industrial Growth:
On the bright side, hope is on the horizon for the latter half of the fiscal year. The resurgence is bolstered by promising indicators such as improved GST collections, stable Purchasing Managers’ Indices (PMIs), and increased capital expenditure. The upcoming Union Budget is expected to unveil strategies aimed at propelling manufacturing growth and igniting the investment cycle, setting the stage for a potential revival in the industrial sector.
Encouraging Signs in Industrial Production:
India’s industrial production reached a six-month peak in November 2024, with a robust 5.2 per cent expansion compared to October’s 3.7 per cent growth, as per the Index of Industrial Production (IIP) data. The upsurge was fueled by a widespread surge across manufacturing, mining, and electricity domains, painting a promising picture for the future of the industrial sector.
Key Highlights from November Data:
Manufacturing Sector Steers Growth:
The manufacturing sector took the lead with an impressive 5.8 per cent growth, marking the highest increase in eight months. Noteworthy improvements were observed in 15 out of 23 sub-sectors, including furniture, electronics, and machinery equipment.
Mining and Electricity Sectors Show Resilience:
Mining output rose by 1.9 per cent, up from 0.9 per cent in October, while electricity production expanded by 4.4 per cent, compared to a 2 per cent growth. This solid recovery across all sectors signals a positive trajectory for the industrial landscape.
Infrastructure and Consumer Goods Surge:
Infrastructure and capital goods output witnessed significant growth rates of 10 per cent and 9 per cent, respectively, in November. Consumer durable goods also saw a spike, reaching a 13-month high of 13.1 per cent, driven by festive season demand. However, FMCG goods experienced a modest 0.6 per cent growth, hinting at potential demand challenges in this segment.
While November’s data showcases robust momentum, the cumulative growth for the fiscal year to date has shown a moderation. The IIP growth has tapered to 4.1 per cent from last year’s 6.5 per cent during the same period, with all sectors – manufacturing, mining, and electricity – reporting subdued growth rates.
Looking forward, all eyes are on the forthcoming Union Budget and RBI policy pronouncements, both anticipated to pivot towards fostering growth and development in the industrial realm.
