The Index of Industrial Production (IIP) growth increased marginally to 4.8% in July from 4.7% in June mainly due to a rise in manufacturing activity, official data released on Thursday showed.
Manufacturing growth during July stood at 4.6%, higher than 3.2% the previous month.
Mining and electricity growth, on the other hand, stood at 3.7% and 7.9%, respectively, in July.
In June, both the groups grew at 10.3% and 8.6%, respectively. July received much higher rainfall, which cooled temperatures, thereby easing demand for power, and boosting manufacturing.
At the use-based classification level, there was a moderation in the y-o-y growth of all the sectors barring capital and intermediate goods in July.
Capital goods grew at a nine-month high of 12% during the month, signalling an uptick in investment activity. “This was supported well by the government capex which picked up in July 2024. The capex of the union and the states (25 state governments) jumped 42.8% yoy to Rs 1.17 trillion during July,” India Ratings and Research (Ind-Ra) said in a note.
Consumer durables growth eased to 8.2% in July from 8.4% in June, and consumer non-durables growth fell to (-)4.4% from (-)1.5%. The latter’s fall was the steepest in 21 months. “This suggests that the stress in rural demand hasn’t bottomed out yet,” said Ind-Ra.
Rajani Sinha, chief economist, CareEdge said that an improvement in kharif sowing amidst a good monsoon bodes well for the private consumption demand. “Overall, a sustained and meaningful improvement in consumption and private capex remains critical for the performance of industrial activity,” she said.
Economists expect the August IIP print to be around 3% due to the statistical effect of a high base. In August 2023, IIP growth was 10.9%.