India’s Industrial Production Growth Declines to 4.2% in June 2024

India’s industrial production, as measured by the Index of Industrial Production (IIP), grew by 4.2% in June 2024, marking the slowest growth in five months. This slowdown was driven by a deceleration in government capital expenditure and weak rural demand, which affected manufacturing growth.

Key Highlights

IIP Figures: The IIP for June 2024 stands at 150.0, up from 143.9 in June 2023. Sectoral indices are 134.9 for Mining, 145.3 for Manufacturing, and 222.8 for Electricity.

Use-Based Classification: The indices are 156.0 for Primary Goods, 110.0 for Capital Goods, 159.0 for Intermediate Goods, and 178.4 for Infrastructure/Construction Goods. Consumer durables and non-durables indices are 126.9 and 144.6, respectively.

Growth Rates

Overall: 4.2% in June 2024 vs. 4.0% in June 2023.

Mining: 10.3%

Manufacturing: 2.6%

Electricity: 8.6%

Sectoral Performance

Manufacturing: Slowed to 2.6%, the lowest in seven months, impacting the overall IIP growth.

Mining: Experienced a robust growth of 10.3%, driven by increased coal demand.

Electricity: Growth eased to 8.6%, down from 13.7% in May.

Sub-Sector Trends

Top Performers: Manufacture of basic metals (4.9%), electrical equipment (28.4%), and motor vehicles (4.1%).

Weak Performers: Other manufacturing (-12.6%), tobacco products (-10.9%), and leather products (-3.9%).

Use-Based Classification

Primary Goods: 6.3% growth

Capital Goods: 2.4% growth

Intermediate Goods: 3.1% growth

Infrastructure/Construction Goods: 4.4% growth

Consumer Durables: 8.6% growth

Consumer Non-Durables: -1.4% decline

Outlook

The slowdown in manufacturing and mixed performance in consumption-related segments highlight the need for a broader consumption recovery and increased private investment. Factors such as food inflation and monsoon progress will be crucial for future industrial activity.