12-Aug-2023
2 mins read
Overview
June 2023 marked a decline in India’s factory output, sliding to 3.7% from May’s 5.2%. When juxtaposed against the 4.5% growth in April, it’s evident that the nation’s industrial growth trajectory is tapering off.
The Highs of 2022
Contextualising the Slowdown, June 2022 experienced a robust 12.6% factory output growth, mainly attributed to a lower base effect caused by the economic repercussions of the COVID-19 pandemic from March 2020. This year’s reduced growth rate needs to be interpreted in light of these unusual circumstances.
Sector Breakdown
Data from the National Statistical Office (NSO) underscores a sluggish performance in the manufacturing sector. Its output in June grew by just 3.1%, a stark contrast to the robust 12.9% growth witnessed the prior year.
- Electricity Generation: Experienced a 4.2% growth in June, down from a stellar 16.4% the previous year.
- Mining: Continued its upward trajectory with a 7.6% growth, slightly lesser than the 7.8% the previous year.
- Capital Goods: Displayed a modest growth of 2.2%, down significantly from 28.6% a year ago.
Quarterly Perspective
Q1 of Fiscal 2024 The first quarter (April-June) of fiscal 2024 posted an IIP growth of 4.5%, a decline from the 12.9% growth seen during the same period the prior year.
Consumer Sector Insights June 2023 witnessed contrasting trends in consumer goods:
- Consumer Durables: Recorded a decline, contracting by 6.9% compared to a growth of 25.2% the previous year.
- Consumer Non-Durables: Experienced a minor growth of 1.2%, lower than the 2.9% growth a year ago.
The slowdown in Year-on-Year growth in June 2023’s IIP to 3.7% was unexpected, as per ICRA Ltd officials. Manufacturing led the decline, while mining and electricity showed some resilience. Furthermore, a sharp contraction was observed in consumer durables, especially in their export segment, says ICRA Ltd.
Closing Thoughts June’s factory output figures reflect the challenges faced by India’s industrial sectors. It will be crucial to observe how the country navigates these challenges in the coming months, especially with external factors like pandemic-induced shifts and global economic trends playing pivotal roles.