Perspective on the IIP Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
Below the Perspective on the IIP Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
“India’s IIP growth stood at 3.5% in July, compared to 1.5% in the previous month. Manufacturing and electricity sector provided support to the overall industrial production, while mining sector continued to contract, though the pace of decline was lower. On the demand side, output of consumer durables and non-durables have shown signs of recovery with a growth of 7.7% (Vs 2.8% in June) and 0.5% (Vs -0.9% in June), respectively. The growth in consumer non-durables is particularly notable, marking the first positive print after five consecutive months of contraction. However, while rural consumption has been holding up well, urban consumption continues to lag, signalling uneven recovery.
On the investment front, infrastructure and construction goods recorded a healthy growth of 11.9% in July (Vs 6.7% in June), underscoring the continued thrust from public sector capex. However, the absence of a strong pickup in private investment amid persistent global headwinds have been weighing on the overall investment scenario in the economy.
The prospects of a favourable monsoon scenario, easing inflation, the ongoing monetary policy transmission of rate cuts and support to consumption from GST and income tax cuts remain supportive of the domestic economy. However, the global challenges stemming from the tariff uncertainties are likely to persist. Looking ahead, the interplay between the developments on the domestic and external front remain critical in shaping the overall industrial activity in the economy.”
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