IIP Slowdown Expected to Impact Fourth Quarter GDP Growth

Ira Singh
Khabar Khabaron Ki,12 May’24

The India’s macroeconomic policies and fundamentals including investments in infrastructure development, transportation, energy, and digital connectivity are strong and likely to translate to positive growth outcome. The recent decline in the India’s Industrial Production (IIP) has raised concerns about its impact on the broader growth trajectory.

Amidst a sluggish performance in the mining sector and capital goods, the India’s industrial production growth declined to 4.9% in March, according data released by the National Statistical Office on Friday.

As the fiscal year 2023-24 draws to a close, analysts worry that the slowdown in industrial activity could have significant implications posing challenges to the economy’s sustainable development.The concern expressed by Chief Economist, Dharmakirti Joshi suggest that the slower growth in industrial production is likely to impact overall GDP growth in the fourth quarter of 2023-24.

However, expectation of a good monsoon, moderating inflation, and signs of pick-up in rural demand are positives for the overall consumption scenario, believe experts.

During FY24, there was wide variation in the monthly IIP output data. The lowest growth during the fiscal was recorded in November at 2.5%, while the highest was in October at 11.9%, according to estimates.

Chief Economist,ICRA,Aditi Nayar, further quoted as saying that the IIP growth is likely to decelerate further in April due to unfavourable base. IIP growth in April 2023 stood at 4.6%, while in March 2023 it was 1.9%.