The Index of Industrial Production (IIP) had expanded 2.6% in April and 6.2% in May 2024.
Among the three major sectors, only manufacturing grew in May-by 2.6%. Mining and electricity output contracted by 0.1% and 5.8%, respectively.
Experts attributed the slowdown mainly to early monsoon and slow pickup in urban consumption.
“The early onset of the monsoon doused activity in mining and the demand for electricity, amidst an anaemic growth of manufacturing,” said Aditi Nayar, chief economist at ICRA.
Tepid industrial volume growth in April and May doesn’t augur well for industrial gross value added (GVA) growth in the first quarter of FY26, she noted.
Industrial GVA growth declined to 6.1% in FY25 from 11.4% in FY24. Official figures for the June quarter will be released in August.
Within the manufacturing sector, 13 out of the 23 industry groups recorded positive growth.
However, only 11 of these sub-sectors had a higher year-on-year growth than the overall growth in May, illustrating the fractured and paltry industrial growth, noted Paras Jasrai, associate director at India Ratings and Research (Ind-Ra).
In terms of use-based classification, three of the six categories recorded a contraction in May – primary goods (1.9%), consumer durables (0.7%), and consumer non-durables (2.4%).
Fall in consumer goods production points to “weak goods consumption by households,” Jasrai said.
Gaura Sengupta, chief economist at IDFC First Bank, said, “The IIP number is confirming that the urban side of the consumption basket is not doing so well.”
On the upside, capital goods continued to be the top performer, with growth at a 19-month high of 14.1%, followed by infrastructure/construction goods (6.3%), and intermediate goods (3.5%).
