India's Industrial Growth Hits 6-Month High; IIP Surges 5.2% in Nov'24: Report The industrial sector faces a tempered outlook, with advance estimates projecting a reduced growth rate of 6.2 per cent for FY25, down from 9.5 per cent in FY24, due to base effects. However, signs of recovery are emerging.
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India's index of industrial production (IIP) surged to a six-month high of 5.2 per cent in November 2024, an uptick from October's 3.7 per cent growth. This performance outpaced projection of 4.5 per cent and was underpinned by broad-based growth across sectors, signaling a recovery in the industrial landscape, as per a report by Bank of Baroda.
The manufacturing sector led the charge with an eight-month high growth of 5.8 per cent, improving on October's 4.4 per cent expansion. Meanwhile, mining output increased to 1.9 per cent from 0.9 per cent in the previous month, and electricity generation rose to 4.4 per cent from 2 per cent in October. The report attributes this growth to the festive season, which spurred demand and production activities across various industries.
Despite these gains, the fiscal year-to-date (FYTD) figures tell a more tempered story. Overall IIP growth moderated to 4.1 per cent, a decline from 6.5 per cent during the same period last year. Manufacturing output slowed to 4.1 per cent, from 5.9 per cent, while mining and electricity growth softened to 3.3 per cent from 9.1 per cent, and 5.3 per cent from 7.7 per cent, respectively.
Key drivers
Out of 23 manufacturing sub-sectors, 15 recorded higher growth in November 2024. Key contributors included furniture, computers and electronics, fabricated metals, machinery, and non-metallic minerals. However, seven sub-sectors, including rubber, plastics, transport equipment, and coke and refined petroleum products, saw slower growth.
In use-based classification, infrastructure and capital goods output posted remarkable growth. Infrastructure goods grew by 10 per cent, doubling from October's 4.8 per cent, while capital goods surged to 9 per cent, nearly triple the previous month's 3.1 per cent. Primary goods and intermediate goods also improved, registering growth of 2.7 per cent and 5 per cent, respectively.
Consumer durable goods saw the most significant rebound, accelerating to a 13-month high of 13.1 per cent growth, up from 5.7 per cent in October. This reflects heightened consumer demand during the festive period. However, the fast-moving consumer goods (FMCG) segment lagged, with growth slowing to 0.6 per cent from October's 2.6 per cent.
Outlook and expectations
The industrial sector faces a tempered outlook, with advance estimates projecting a reduced growth rate of 6.2 per cent for FY25, down from 9.5 per cent in FY24, due to base effects. However, signs of recovery are emerging. GST collections remain robust, purchasing managers' indices (PMIs) are steady, and capital expenditure (capex) spending and investment cycles show promise.
The upcoming Union Budget will be a pivotal moment, with expectations of policies aimed at bolstering manufacturing and driving industrial growth. Strategic investments in infrastructure, coupled with targeted incentives, could sustain the recovery momentum in the latter half of FY25.
