India’s Index of Industrial Production (IIP) slumped to a three-month low registering a growth rate of 5% in April 2024, according to the data released by the Ministry of Statistics and Programme Implementation (MoSPI). India’s IIP growth rate stood at 4.6% in the corresponding month of April 2023 and it reached its highest in the intermediatory period with 11.9% growth in October 2023.
The IIP growth rate took a staggering downturn and slowed to 2.5 per cent in November 2023, 4.2 per cent in December 2023 and 4.1 per cent in January 2024. In the following two months of February and March 2024, IIP growth stood at a restated growth of 5.6% and 5.4% respectively, only to decline further in April 2024.
Mining, Manufacturing, and Electricity sectors stood as the three sectors with the highest growth rates in April 2024 with 6.7%, 3.9% and 10.2 % year-on-year respectively.
“Within the manufacturing sector, the growth rate of the top three positive contributors to the growth of IIP for the month of April 2024 are – “Manufacture of basic metals” (8.1%), “Manufacture of coke and refined petroleum products” (4.9%), and “Manufacture of motor vehicles, trailers and semi-trailers” (11.4%),” MoSPI said.
Mixed Consumption Pattern
The capital goods segment came down to a 3.1 growth rate in April 2024 from 4.4 per cent in the same month of last year. The production of consumer durable however reached 9.8 per cent growth during April 2024 compared to a decline of 2.3 per cent in April 2023, while the output of non-durable consumer goods decreased by 2.4 per cent after registering 11.4% production growth in April 2023. Production of goods for infrastructure and construction recorded a growth of 8% in April 2024, as compared to a 13.4% growth YoY.
“The consumption scenario in the economy continues to be supported by urban demand, while rural demand is yet to see a durable recovery,” economists at CARE Ratings wrote in a note. “While prospects of good monsoon [rains] are a positive, challenges from elevated unemployment levels and high food inflation continue to persist,” they added.
Modi’s Push for Manufacturing
According to the officials familiar with the development, the newly re-elected Prime Minister Narendra Modi is reportedly planning to offer subsidies to the semiconductor and EV manufactures in the country, in addition to lowing import taxes on key raw materials to facilitate localisation of global scale manufacturing.
