A Closer Look at India's Industrial Slowdown: June 2024 IIP Analysis
India’s industrial landscape showed signs of cooling in June 2024, with the Index of Industrial Production (IIP) registering a growth of 4.2% year-on-year — a noticeable dip from the 6.2% recorded in May 2024. This represents the lowest growth rate since January 2024, prompting concerns about the underlying strength of industrial demand and manufacturing resilience.
Sector-Wise Snapshot
Despite the overall slowdown, the performance across sectors was mixed, with some showing resilience while others dragged down the index:
Mining: Emerged as a bright spot, recording a 10.3% growth in June 2024 compared to the same month last year.
Manufacturing: The backbone of the IIP, grew by a modest 2.6%, down from 5.0% in May — indicating sluggish activity and perhaps weakening demand.
Electricity Generation: Registered a growth of 8.6%, though slower than the impressive 13.7% expansion seen in May.
Use-Based Classification: Growth vs Decline
Breaking down the IIP data by use-based classification offers more insight into consumer behavior and investment trends:
Primary Goods: Rose by 6.3%, indicating steady demand for essential raw materials.
Capital Goods: Increased by 2.4%, a sign of tepid investment activity.
Intermediate Goods: Posted a 3.1% rise, suggesting stable supply chain operations.
Infrastructure/Construction Goods: Saw a 4.4% increase — a healthy sign of ongoing infrastructure development.
Consumer Durables: Showed encouraging growth at 8.6%, signaling recovery in high-ticket consumer purchases.
Consumer Non-Durables: Declined by 1.4%, raising concerns about demand for everyday essentials and FMCG products.
Manufacturing Highlights: Who’s Driving Growth?
Within the manufacturing sector, a few industries stood out as key growth drivers:
Electrical Equipment: Surged by 28.4%, possibly reflecting strong demand in electrification and appliances.
Basic Metals: Grew by 4.9%, consistent with infrastructure and construction needs.
Motor Vehicles, Trailers, and Semi-Trailers: Increased by 4.1%, reinforcing the gradual momentum in the auto sector.
Quarterly Perspective
Looking at a broader time frame, India’s industrial output rose by 5.2% in the April–June 2024 quarter — an improvement over the 4.7% seen during the same period last year. This suggests that while June's numbers signal a deceleration, the quarterly performance still offers a relatively stable growth story.
Final Thoughts: A Mixed Bag
The June 2024 IIP figures reflect a measured slowdown, especially in manufacturing. While infrastructure and consumer durables are showing some buoyancy, the dip in non-durables and capital goods is a cautionary sign.
With global headwinds, fluctuating commodity prices, and shifting domestic consumption patterns, India’s industrial trajectory will require close monitoring in the months ahead. Policy interventions to stimulate demand and investment, especially in the manufacturing sector, could be critical in sustaining growth momentum.
Comments
Post a Comment