If growth reverts to the pre-Covid level, a lot of people may have to temper their rosy optimism, points out Debashis Basu.
India's factory output maintained its robust pace in March, growing by 13.5 per cent despite monetary tightening and a partial roll back of stimulus measures. Driven largely by manufacturing, this was the sixth straight month of double-digit expansion.
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Output of consumer durables fell to 3.1 per cent in the first month of this calendar year, against 5.3 per cent growth in the same month last year. In the April-January period production declined to 1.7 per cent, against 10.6 per cent growth in the same period last fiscal. Growth in manufacturing output, which has an overwhelming weight in the IIP, slipped to 5.9 per cent in January, against 12.3 per cent, electricity generation fell to 3.3 per cent, against 8.3 per cent.
There was more good news for the government on the economic front with the industry recording a 6.5 per cent growth for the first 10 months of the current financial year as against 5.7 per cent during the same period of last fiscal.
Industry insiders in India warn that any such move in the pharmaceutical sector could be counterproductive for the US as it may face increased drug shortages if tariffs are imposed on such imports.
Rising interest cost led to drastic deceleration in manufacturing growth to 3.9 per cent in May, compared to 11.3 per cent in a year-ago period. Manufacturing has a weight of over 79 per cent in IIP.
Negative growth in mining and electricity pulled down the industrial growth to 4.9 per cent in February this year, nearly half of 8.3 per cent growth recorded in the same month previous year.
The weakening of inflation, prospects of economic growth, geopolitical uncertainty and comfortable system liquidity may result in the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) to cut the repo rate by another 25 basis points, opine top economists. They also said the external economic pressures like trade policies and others would require continued RBI's accommodative stance and policy support for the Indian industry to sustain the growth.
Slowdown in industrial production notwithstanding, a marginal increase in inflation raised the clamour for another round of rate cut by the Reserve Bank on April 4 to boost economic activity.
Industrial growth in the country revived moderately to 8.8 per cent in June this year on the back of a smart recovery in the manufacturing sector and better offtake of capital goods.
India needs to revive corporate sector investment, push critical reforms and remove infrastructural bottlenecks to boost industrial growth in the country, says a government document.
Aided by a high growth in the manufacturing sector, the industrial growth in the country touched 6.3 per cent during April-December 2003 as against 5.5 per cent during the corresponding period of 2002.
The manufacturing sector, which accounts for over 75 per cent of the total weight of the index, grew by just 5.6 per cent in May.
Despite high headline numbers, the output of one-third of the segments in the manufacturing sector in August stood below even that in the same month in 2011-12, when the new index of industrial production (IIP) series started. This is despite the fact that manufacturing grew 9.3 per cent in the month, driving up IIP growth to a 14-month high of 10.3 per cent. Part of it is due to the devastation of these product categories by lockdowns induced by Covid waves and subdued export conditions, while part of it needs to be assessed further.
The growth of eight key infrastructure sectors rose to a 14-month high of 12.1 per cent in August 2023 against 4.2 per cent a year ago, mainly due to expansion in production of coal, crude oil, and natural gas, according to the official data released on Friday. The expansion in August is the highest since June 2022, when it was 13.2 per cent. The production of refinery products, steel, cement and electricity also grew in August, the data showed.
'The pollution has increased. We are facing breathing problems and irritation in the eyes'
Production of eight infrastructure sectors increased by 5.4 per cent in November against a 3.2 per cent growth in the same month last year on a better show by coal, fertiliser, steel, cement and electricity segments, according to the official data released on Friday. Crude oil, natural gas and refinery products, however, recorded negative growth in November this year. The production growth of eight key sectors slowed down to 0.9 per cent in October.
The index could be vulnerable to a bigger fall given the present market dynamics.
Snapping an eight-month trend of double-digit rise, industrial growth slid to 7.1 per cent in June from 8.3 per cent a month ago.
India's services sector growth touched a four-month high in December, supported by new business inflows on strong demand conditions and easing inflationary pressures, a monthly survey said on Monday. The seasonally adjusted HSBC India Services Business Activity Index, rose from 58.4 in November to 59.3 in December, highlighting the strongest rate of expansion in four months.
'Spending by the middle class is limited with a focus on savings. However, there is buoyancy at the top-end.'
Powered by the high growth of the manufacturing sector, industrial growth touched 7.6 per cent during the first quarter of the current financial year as against 5.7 per cent during April-June, 2003.
Starting the new financial year on a positive note, the industrial growth more than doubled to 9.4 per cent in April 2004.
Led by a strong performance from the manufacturing sector, industrial growth shot up to 8.4 per cent during April-December this fiscal.
India's manufacturing sector growth fell to a 12-month low in December, as new business orders and production expanded at softer rates, a monthly survey said on Thursday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index was at 56.4 in December, down from 56.5 in November, indicating a weaker improvement in operating conditions.
Led by strong recovery in the manufacturing sector, industry grew at 7.9 per cent in the first six months of the current fiscal compared to 6.2 per cent in the same period last year.
With the manufacturing sector gearing up, India's industrial growth improved to 5 per cent in the first two months of this year as against 4.1 per cent in the previous year, despite mining and electricity sectors performing poorly.\n\n\n\n
The growth of eight key infrastructure sectors slowed down to a 4-month low of 8.1 per cent in September 2023 against 8.3 per cent a year ago, according to the official data released on Tuesday. The growth rate in the output of refinery products, fertiliser, cement and electricity during the month under review has decelerated, while it was negative in the case of crude oil. The previous low was in May, when the growth rate of these sectors stood at 5.2 per cent.
Indian industry has logged a growth of 9.5 per cent in April 2006 as against 8.1 per cent in the same month last fiscal.
The record contraction in the growth rate of eight core sectors will have its impact on IIP.
Industrial production in May slowed to 2.7 per cent from 5.6 per cent a year ago, dragged down by manufacturing, strengthening the case for an RBI rate cut.
A sharp slowdown in mining sector lowered industrial growth to 7.4 per cent during August 2005 as against 8.6 per cent in the same month last fiscal.
The Institute of Economic Growth also expected banks prime lending rates to decline to below 11 per cent in next few months which would further spur industry growth.
The sharp rise was also due to a statistical illusion -- low industrial numbers in November 2015, and sharp reversal of a 12-month declining trend in capital goods.
The RBI interest rate decision, industrial production data for June and the ongoing quarterly earnings from corporates would largely drive the stock markets this week, analysts said. Other major factors such as global market trends, the movement of oil prices and the trading activity of foreign investors would also influence trading, they added. "The market will have an eye on the RBI Monetary Policy Committee (MPC) meeting, which will be announced on August 10, 2023. We are heading towards the last batch of Q2 earnings of key companies such as Adani Ports, Coal India, Hero MotoCorp, Hindalco and ONGC, among others, which will lead to stock-specific movement," said Pravesh Gour, senior technical analyst, Swastika Investmart Ltd.
The growth of eight key infrastructure sectors slowed down to 4.3 per cent in May 2023 due to a decline in the production of crude oil, natural gas and electricity, according to the data released by the government on Friday. The core sector growth was 19.3 per cent in May 2022, while in April 2023, the key infra sectors recorded a growth rate of 4.3 per cent. During April-May this fiscal, the output growth of these eight sectors slowed down to 4.3 per cent against 14.3 per cent in the year-ago period, the data showed.
Gujarat, for the second consecutive year, has topped the Niti Aayog's Export Preparedness Index 2021 which is aimed at assessing the readiness of the states in terms of their export potential and performance. Gujarat was followed by Maharashtra, Karnataka, Tamil Nadu, Haryana, Uttar Pradesh, Madhya Pradesh, Punjab, Andhra Pradesh and Telengana, according to the government think tank's report. Union territories and states like Lakshadweep, Arunachal Pradesh, Mizoram, Ladakh and Meghalaya were placed at the bottom.
Industrial growth during November 2005 slumped to 6.9 per cent from 7.7 per cent in the year-ago period
In an eventful week ahead, stock markets may face volatile trends before the RBI's interest rate decision and the US inflation data announcements, as investors continue to assess the broader implications of US tariffs on global economy and inflation, analysts said. Investors fear that a full-blown trade war will impact global trade and economic growth, according to market experts.
