India's March Industrial Growth Dips to 4.9% Amid Mining Decline

The Ministry of Statistics and Programme Implementation released figures on May 10 showing that India's industrial growth dropped to 4.9% in March from 5.7% in February.

India's Index of Industrial Production (IIP) rose to 5.8% in fiscal year 2023-24 (FY24) from 5.2% the previous year.

In March 2023, India's industrial output increased by 1.9%.

Factors Behind the Slowdown

The decline in industrial growth in April compared to a month ago was primarily due to the mining sector, whose output grew by only 1.2 percent, down from an 8.0 percent increase in February.

However, the manufacturing and electricity sectors saw an increase, with growth rates of 5.2 percent and 8.6 percent respectively, compared to 5.0 percent and 7.5 percent in the previous month.

Within the manufacturing sector, the top three positive contributors to IIP growth in March 2024 were basic metals (7.7 percent), pharmaceuticals, medicinal chemical and botanical products (16.7 percent), and other transport equipment (25.4 percent), as per the Ministry's statement.

Cumulative Growth Rates

The cumulative growth rates of the mining, manufacturing, and electricity sectors for April-March 2023-24 over the corresponding period of the previous year were 7.5 percent, 5.5 percent, and 7.1 percent respectively.

Use-based Classification of Goods

In March, the production growth on a year-on-year basis for different categories of goods was as follows:

- Primary goods: 2.5 percent
- Capital goods: 6.1 percent
- Intermediate goods: 5.1 percent
- Infrastructure goods: 6.9 percent
- Consumer durable goods: 9.5 percent
- Consumer non-durable goods: 4.9 percent

"Within the manufacturing sector, the growth rate of the top three positive contributors to the growth of IIP for the month of March 2024 is: "manufacture of basic metals" (7.7%), "manufacture of pharmaceuticals, medicinal chemical, and botanical products" (16.7%), and "manufacture of other transport equipment" (25.4%)," according to the official statement.

Core Industries' Impact

The slowdown in industrial output was expected, following a growth of 5.2 percent in March for India's eight core sectors, which make up more than 40 percent of the weight of the IIP.

The data suggests a nuanced picture of India's industrial sector, with varying growth rates across different segments. The moderation in growth in March raises concerns about the pace of India's industrial recovery, highlighting the need for sustained efforts to stimulate growth and address sector-specific challenges.