India's industrial output expanded at the slowest pace in the last three months in April with the manufacturing sector, which accounts for the bulk of factory output, decelerating sharply.
The Index of Industrial Production (IIP), a key indicator of the industrial sector performance, grew 5% year-on-year last month as per the latest data released by the National Statistical Organisation. This marks a decline compared to the 5.4% growth recorded in March as well as the 5.6% expansion in February.
The manufacturing segment, which has a over 75% weight in the IIP, saw its growth rate drop to 3.9% in April from 5.5% in the same month last year. The segment had clocked a growth rate of 5.8% in March.
Other sectors performed better with mining output rising 6.7% driven by higher coal and crude oil production. Electricity generation also grew at a robust pace of 10.2% led by strong demand from households as well as industries.
Within manufacturing, only segments like consumer durables and primary goods witnessed an increase in growth. Output of capital goods, infrastructure items and intermediate goods expanded at a slower pace. The consumer non-durables segment was the only segment that saw a contraction in production.
This divergence in household demand patterns points towards skewed consumption with upper-income groups driving spending, limiting broader economic revival. Sustained recovery will hinge on strengthening demand across all classes of consumers.
With inflationary pressures and slowing global growth acting as key headwinds, factories may find it difficult to maintain the momentum in the coming months without policy support to energize consumption and investment. The performance of the agriculture sector post the monsoon will also be crucial.
